April 1996 Federal Election Commission Volume 22, Number 4

Table of Contents

Regulations

1 MCFL Rules on Corporate/Labor

Activity Take Effect

Court Cases

1 FEC v. GOPAC

9 Maine Right to Life v. FEC

 9 FEC v. Legi-Tech

10 RNC v. FEC

11 FEC v. National Right to Work

12 Jordan v. FEC

12 Hartnett v. FEC

Information

2 FEC Now Accepts Mastercard and

Visa

2 Free FEC Brochures

Audits

2 Jude for Congress

10 Federal Register Notices

Compliance

12 Nonfilers

13 MURs Released to the Public

Party Activities

14 1996 Coordinated Party

Expenditure Limits

15 Advisory Opinions

Public Funding

16 Alan Keyes Certified

16 Mid-March Matching Fund

Payments

16 Hearing on Fulani Repayment

Determination

Statistics

18 1995 Year-End PAC Count

18 Index

Regulations Court Cases

MCFL Rules on Corporate/

Labor Activity Take Effect

On March 13, 1996, new and

revised FEC regulations on corporate

and labor communications and the

use of corporate/labor facilities and

resources went into effect.1

 These

rules, which represented the second

part of the Commission’s MCFL

rulemaking, reflect recent judicial

and Commission interpretations of

2 U.S.C. §441b. This section of the

law prohibits corporate/labor organizations from using treasury funds to

make contributions or expenditures

in connection with federal elections.

The new rules modify FEC

regulations in five significant ways:

• They provide a new standard for

determining which communications

must be limited to the restricted class;

• They set guidelines for communications made by corporate/labor

organizations;

• They clarify that coordination

1 Announcement of Effective Date, 61

FR 10269, March 13, 1996. Final Rule,

60 FR 64260, December 14, 1995, with

corrections, 61 FR 4302, February 5,

1996. Use the FEC’s automated Flashfax

system to have copies of these Federal

Register notices faxed to you; use a touch

tone telephone to dial 202/501-3413

and request document 230 at the prompt.

(continued on page 3)

FEC v. GOPAC

On February 28, 1996, the U.S.

District Court for the District of

Columbia ruled in GOPAC’s favor

and dismissed this case. The FEC

had asked the court to find that,

under the Federal Election Campaign Act, GOPAC first qualified as

a political committee in 1989 and as

such was required to file and

register with the FEC since then.

GOPAC argued that it did not

qualify as a political committee

under the Act until 1991, at which

time it did register with the FEC.

The court ruled that an organization’s status as a political committee

under the Act is properly determined by applying the “major

purpose” test to narrow the statutory

definition, which states that a

political committee is any group that

receives at least $1,000 in contributions or makes at least $1,000 in

expenditures to support federal

candidates. According to the court,

the major purpose test serves as a

bright line that separates groups that

are political committees from those

that are not; under the major purpose test, a group is a political

committee if its major purpose is to

elect a particular candidate or

candidates for federal office.

(continued on page 8)
2

Federal Election Commission RECORD April 1996

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

202/219-3420

202/501-3413 (Flashfax Service)

202/219-3336 (TDD)

Lee Ann Elliott, Chairman

John Warren McGarry,

Vice Chairman

Joan D. Aikens, 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

Dario Bard, Editor

Information

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 4 to 5 days.

Visitors to the FEC’s Public

Records Office will also be 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 new credit card payment

system also reduces costs and

paperwork associated with check

processing, enabling FEC staff to

better serve the walk-in visitor. ✦

Free FEC Brochures Address

Common Questions

How does the $25,000 annual limit

for individuals work? How far

reaching is the ban on foreign national

contributions? When do state laws

apply to federal campaign activity?

The answers to these questions

can be found in three of the FEC’s

free brochures: “The $25,000 Annual

Contribution Limit,” “Foreign

Nationals” and “Federal and State

Campaign Finance Laws.” Other

available brochures address advisory

opinions, filing an administrative

complaint, independent expenditures,

volunteer activity and a number of

other federal election issues.

Free brochures may be ordered

from the FEC’s Information Division: 800/424-9530. We accept bulk

orders of a few hundred brochures.

Political committees are encouraged

to order brochures in bulk and distribute them to their contributors. ✦

Audits

Jude for Congress Audit

Report

An FEC audit of Jude for Congress, Thaddeus Jude’s 1994 campaign for the U.S. House seat in

Minnesota’s sixth district, found that:

• Ruth Jude, the candidate’s mother,

appears to have exceeded her

contribution limit by having

infused funds into her deceased

husband’s trust account, which

were used by the candidate to make

a $50,000 loan to his committee;

• The committee failed to itemize 28

contributions received from

individuals totaling $19,550;

• The committee failed to itemize 32

contributions received from political

committees totaling $19,753; and

• The committee failed to disclose

the purpose of a material number

of disbursements.

The committee submitted amended

reports to correct the reporting

deficiencies described above.

With regard to the first finding,

Ruth Jude, the candidate’s mother,

appears to have exceeded her $1,000

contribution limit to the candidate’s

campaign when she transferred

$50,000 from her trust account into

the Victor N. Jude Revocable Trust,

the trust account of her deceased

husband. This transaction provided

liquidity to the Victor Jude trust

account. The candidate issued

himself a $50,000 check drawn on

his father’s trust account and loaned

the money to his campaign. The

candidate also deposited an additional $1,500 from the Victor Jude

trust account into his campaign.

According to the committee’s

attorney, the $50,000 transaction did

not represent a loan from Ruth Jude

to her son’s campaign for the

purpose of influencing an election,

but rather a loan to her son of a

portion of his share of the Victor

Jude Trust.

The FEC notes, however, that the

trust agreements of neither the

Victor Jude account nor the Ruth

Jude account provided for such

disbursements to the candidate at

the time of these transactions.

This audit was conducted pursuant to 2 U.S.C. §438(b), which

authorizes the Commission to

conduct audits of any political

committee that files reports that fail

to meet the threshold level of

compliance set by the Commission.

Subsequent to a final audit report,

the FEC may choose to pursue any

of the audit’s findings in an enforcement matter. ✦
3

April 1996 Federal Election Commission RECORD

April Reporting

Reminder

Committees filing on a

quarterly basis must file their first

quarterly report by April 15.

Those filing on a monthly

schedule have a report due on

April 20.

Please note that, in addition

to filing quarterly reports,

committees of candidates active

in 1996 primary and runoff

elections must file pre-election

reports and may have to file 48-

hour notices. PACs and party

committees filing on a quarterly

basis may also have to file preelection reports.

For more information on

1996 reporting, including

reporting dates and when to file

48-hour notices, see the reporting

schedule in the January 1996

Record. To order the 1996

reporting schedule handout, call

800/424-9530 or 202/219-3420.

Or use Flashfax: 202/501-3413

and request document 344.

For special election reporting,

see: February Record, page 5 (CA

37th); and March Record, page 2

(MD 7th, OR 3rd).

between a corporation (or labor

organization) and a candidate

generally results in an illegal

contribution to the candidate;

• They provide guidelines on the

permissible uses of corporate and

labor facilities and resources; and

• They clarify that corporate and

labor facilitation of contributions

to candidates and committees is

prohibited.

New Standard for Identifying

Communications Appropriate for

Restricted Class

The new rules substitute a new

standard for the partisan/nonpartisan

standard previously used for deciding

which communications had to be

limited to the restricted class (i.e.,

members, stockholders, executives,

administrative personnel and the

families of each group) and which

could be distributed to a broader

audience (i.e., all employees or the

general public). The new standard is

based on “express advocacy” (i.e., a

communication that expressly

advocates the election or defeat of a

clearly identified candidate for

federal office or the candidates of a

clearly identified political party). See

also the August 1995 Record, page 1.

Under this new standard, corporate

and labor communications that

contain express advocacy may be

sent only to the restricted class.

Corporate/Labor Communications

The new rules also provide

guidance on the following:

• Candidate appearances and

speeches at corporate/labor events;

• Endorsements of candidates;

• Candidate appearances and

speeches on college campuses;

• Candidate debates;

• Written political communications,

including voter guides, voting

records and press releases;

• Voter registration and get-out-thevote drives; and

• Voting information. (See the

accompanying chart.)

Coordination with Candidate

A new provision in the revised

rules addresses the topic of coordination between a candidate and the

corporate or labor sponsor of an

election-related communication.

When communicating with its

restricted class, a corporation or

labor organization may coordinate

with candidates concerning their

campaign plans, projects and needs.

That coordination, however, may

compromise the independence of

future communications to the

general public (by the organization

or its separate segregated fund).

When communicating beyond the

restricted class, coordination with

the candidate (other than the kinds

of coordination specified in the

regulations—see chart) may result

in a prohibited in-kind contribution

to the candidate. Additionally, it

may compromise the independence

of future communications to the

general public (by the organization

or its separate segregated fund).

Permissible Use of Corporate and

Labor Facilities

The new regulations reaffirm that,

if a candidate or committee uses the

facilities of a corporation or labor

organization, the organization must

be reimbursed within a commercially

reasonable time for the usual and

normal rental charge. Reimbursement is not required for the use of

meeting rooms if the organization

normally makes such rooms available to civic or community groups

without charge and if it makes the

room available on the same terms to

any other candidate (running for the

same office) who requests to use it.

Facilitation of Contributions

Additionally, the rules clarify that

corporations and labor organizations

are prohibited from facilitating

contributions to candidates or

political committees (other than the

organization’s separate segregated

fund). Facilitation means using

corporate or labor facilities or

resources to raise funds in connection

with any federal election. The new

regulations provide several examples.

They also explain that, in a few

specific cases, a fundraising activity

sponsored by a corporation or labor

organization is not facilitation if

someone, such as a candidate,

individual or political committee, pays

the organization in advance for the

use of the facilities or resources. This

principle applies to three situations:

• Directing staff to work on the

fundraiser;

• Using the corporate or labor

organization’s mail list; and

• Using the organization’s food

services. ✦

Regulations

(continued from page 1)

(Regulations continued on page 4)
Corporate/Labor Communications

Candidate Appearances1 Restricted Class Other Employees2

Campaign-Related Appearance at

Corporation or Labor Organization

11 CFR 114.3(c)(2), and 114.4(b)(1)

and (2)

1 These rules also apply to appearances by party representatives.

2 Communications directed to employees outside the restricted class may also go to those within the restricted class.

3 That consultation, however, may compromise the independence of future communications to the general public by the organization or its separate segregated fund.

Candidate may advocate his/her

election, but the organization and its

SSF may not; nor may they encourage employees to do so.

Candidate may solicit funds, but

neither the organization nor its SSF

may solicit, direct or control contributions to candidate, in connection

with the appearance.

Candidate may not accept contributions at event, but may leave return

envelopes and campaign materials

for audience.

Organization must, upon request,

give opportunity to all candidates

seeking the same office. Unless

impractical, organization must make

equal time and location available to

all candidates who wish to appear.

Organization may consult candidate

on structure, format and timing of

appearance, but not on candidate's

campaign plans, projects or needs.

(Same as the adjacent restricted

class rules.)

(Same as the adjacent restricted

class rules.)

In addition to restricted class and

other employees, news media and

guests being honored or participating may attend.

Organization and candidate may

expressly advocate election or

defeat of candidate.

Organization may solicit for candidate, but may not collect contributions.

Candidate may solicit and accept

contributions before, during or after

appearance.

Organization may bar other candidates from addressing restricted

class.

Organization may consult candidate

on structure, format and timing of

appearance, and on campaign plans,

projects or needs.3

If organization allows more than

one candidate to appear, and permits

news coverage, it must allow media

to cover appearances by other

candidate(s) for same office.

Organization must provide news

media equal access.

De minimis number outside restricted class may attend: employees

who facilitate the meeting, news

media, guests being honored or

participating.

Organization must file reports if

communication contains express

advocacy and costs exceed $2,000

per election.

4

Federal Election Commission RECORD April 1996
Noncampaign-Related Appearance

at Corporation or Labor Organization

AO 1980-22

Public Debates

11 CFR 114.4(f)

Public Appearance at a College or

University4

11 CFR 114.4(c)(7)

Candidate may speak about issues of interest to industry or union.

Candidate must avoid reference to campaign—no solicitation and no advocacy of election.

No requirement to offer other candidates equal opportunity.

Proximity to election day is not relevant.

Any corporation or labor organization may donate funds to support debate

conducted by nonprofit organization.

Debate may be sponsored by nonprofit organization—501(c)(3) and

501(c)(4)—that does not support or oppose any candidate or party, or by a

broadcaster, newspaper, magazine or other general circulation periodical

publication.

Debate must include at least two candidates, meeting face to face, and may

not promote one candidate over another.

Organization staging debate must select debate participants on the basis of

preestablished objective criteria:

• In primary election, may restrict candidates to those seeking nomination of

one party

• In general election, may not use nomination by a particular party as sole

criterion

Tax-exempt educational institution—either incorporated or not—may rent

facilities to candidate or political committee in normal course of business and

at usual and normal charge.

Tax-exempt educational institution—either incorporated or not—may make

facilities available to candidate or party for free or at discount if it:

• Makes reasonable efforts to avoid campaign event and ensure that appearance constitutes communication in academic setting;

• Does not make express advocacy communication; and

• Does not favor one candidate or party over another.

College or university may host noncampaign appearance under above

guidelines.

College or university may host candidate debates under above guidelines.

Candidate Appearances General Public

5

April 1996 Federal Election Commission RECORD

4 Consult IRS or applicable state rules regarding state colleges and universities, and private tax-exempt schools.
Publications Restricted Class General Public

Organization may expressly advocate election or defeat of candidate

or a party's candidates.

Organization may solicit contributions for candidate or party.

Organization may use brief quotations from candidate, but may not

republish candidate materials.

Organization must file reports if

communication contains express

advocacy and costs exceed $2,000

per election.

Organization may not expressly

advocate election or defeat of

candidate or a party's candidates.

No solicitations.

 General Public

General Rule

11 CFR 114.3(a), (b) and (c)(1),

and 114.4(c)(1)

Voting Records of Incumbent

Candidates

11 CFR 114.4(c)(4)

Voter Guides

11 CFR 114.4(c)(5)

Press Releases/Endorsements

11 CFR 114.4(c)(6)

Organization may publish factual record of votes on legislative matters.

Voting record may not include express advocacy.

Decision on content and distribution may not be coordinated with candidate

or party.

Type 1: Based on prepared written questions submitted to candidates

Type 2: Not based on written questions

Characteristics Common to Both Types of Guides:

• Guide consists of at least two candidates' positions on campaign issues.

• Guide may include biographical information.

• Organization may not coordinate with candidates concerning content

(other than by receiving prepared questions) or distribution.

• Guide may not contain express advocacy.

Characteristics of Voter Guide Based on Written Questions (Type 1):

• Questions may be directed in writing to all candidates for a particular

Congressional seat and candidates may respond in writing.

• Questions may be directed in writing to Presidential candidates (all in one

party for primary or all on general election ballot in state where guide is

distributed or in enough states to win majority of electoral votes).

• No candidate may receive greater prominence than another.

• Guide may not contain an electioneering message.

• Guide may not score or rate responses in such a way as to convey an

electioneering message.

Organization (except 501(c)(3) nonprofit organization) may announce at a

press conference or in a press release sent to regular press contacts that it

made a candidate endorsement to its restricted class, as long as costs are de

minimis and the announcement is not coordinated with candidate

6

Federal Election Commission RECORD April 1996
Organization may expressly advocate

election/defeat of candidate/party.

Organization may use phone bank to

encourage registration and voting

for particular party and candidate.

Organization may provide transportation to registration place and to

polls, but cannot condition service

on support of particular candidate or

party.

 General Public

Voting Information Restricted Class General Public

Voter Drives: Registration and GetOut-the-Vote

11 CFR 114.4(d)

Voter Advertisements

11 CFR 114.4(c)(2)

Distribution of Official Voter

Information

11 CFR 114.4(c)(3)

Organization may not expressly advocate election/defeat of candidate/party.

(Same as the adjacent restricted

class rules.)

Organization must give persons

receiving services written notice of

the nonpartisan nature of the

services.

No coordination with candidate or

party is permitted.

Organization may not pay individuals conducting drive based on

number of persons (registered or

transported) who support particular

candidate or party.

Organization may not target people

it believes will support its favored

candidate or party.

Organization may pay for ads (posters, billboards, broadcasting, print or

direct mail) urging public to register to vote and to vote.

The advertisement may not contain express advocacy.

The advertisement may not be coordinated with candidate.

Organization may distribute voter information produced by official election

administrators, including registration-by-mail forms and absentee ballots.

Voter information may not contain express advocacy.

Voter information may not be coordinated with candidate.

Organization may give funds to state and local governments to defray costs

of voter registration, voting information and forms.

7

April 1996 Federal Election Commission RECORD
8

Federal Election Commission RECORD April 1996

FEC Administrative Activity

Following an investigation into

an administrative complaint filed by

the Democratic Congressional

Campaign Committee in September

1990, the FEC found probable cause

to believe that in 1989 GOPAC

qualified as a political committee

under the Act, and that, until 1991,

GOPAC failed to abide by the Act’s

registration and disclosure requirements for political committees. This

probable cause finding was based on

a GOPAC solicitation that urged

contributors to help “break the

Democrats’ stronghold on power” in

the U.S. House of Representatives.

The FEC was unable to reach a

conciliation agreement with GOPAC

and filed this lawsuit on April 14,

1994. The FEC asked the court to

impose civil penalties on GOPAC

and to require GOPAC to file 1989

and 1990 disclosure reports.

Factual Background

In 1989, GOPAC’s stated mission

was: “to create and disseminate the

doctrine which defines a caring,

humanitarian, reform Republican

Party in such a way as to elect

candidates, capture the U.S. House

of Representatives and become a

governing majority at every level of

government.”

The court said that although this

mission statement had as its ultimate

objective the election of Republican

candidates to the U.S. House of

Representatives, GOPAC’s direct

support in 1989 and 1990 was for

state and local candidates and not

for any federal candidates.

GOPAC did develop and distribute materials espousing a set of

ideas for Republican candidates,

including federal candidates.

GOPAC also targeted cash contributions to local and state candidates in

areas where it hoped this support

Court Cases

(continued from page 1)

might indirectly influence the

election of other candidates, including federal candidates, on the

Republican ticket.

GOPAC also provided assistance

to Congressman Newt Gingrich in

1989 and 1990, but the court said

there was no material evidence that

Congressman Gingrich used these

funds for his 1992 reelection

campaign as opposed to his work as

GOPAC Chairman.

Legal Analysis

The Act defines a political

committee as any group that receives at least $1,000 in contributions or makes at least $1,000 in

expenditures for the purpose of

influencing a federal election.

2 U.S.C. §431(4)(A).

In Buckley v. Valeo, the Supreme

Court, citing First Amendment

concerns, ruled that the definition of

political committee “need only

encompass organizations that are

under the control of a candidate or

the major purpose of which is the

nomination or election of a candidate.”

The FEC contended that the

Buckley decision did not require a

group to provide direct support to a

specific federal candidate in order

for the group to be considered a

political committee under the major

purpose test. Instead, the FEC argued

that Buckley’s definition of “political

committee” encompassed groups

organized to engage in partisan

electoral politics or electoral activity.

Accordingly, the FEC argued that if

GOPAC’s sole purpose was to

advocate the election of Republicans

as a class of candidates, then the

purpose of its activities was by

definition campaign related. And if

its expenditures or contributions for

these campaign-related activities

exceeded $1,000, it qualified as a

political committee under the Act.

The court disagreed because it

found the term “partisan electoral

politics” to be vague and therefore

to chill the First Amendment rights

of issue advocacy groups. The court

quoted the Buckley decision: “ . . .

the distinction between discussion

of issues and candidates and advocacy of election or defeat of candidates may often dissolve in practical

application.”

The court reasoned that a brightline test was therefore required, so

that contributors and committee

treasurers could easily conform their

conduct with the law and so that the

FEC could easily identify violations

and take quick and decisive action.

The court concluded that the

appropriate bright line was provided

by limiting the definition of political

committee to groups whose major

purpose was the election of a particular federal candidate or candidates.

The court said that this test drew

two relatively clear lines: it distinguished between federal and nonfederal candidates; and it distinguished

between groups that support particular federal candidates and those that

lend general party support.

The court noted that the FEC

conceded that there was no evidence

of direct GOPAC support to federal

candidates in 1989 and 1990.

GOPAC’s support appeared to have

been limited to state and local

candidates, to general nationwide

dissemination of ideological materials and to Congressman Gingrich in

his role as GOPAC chairman and

not as a federal candidate. The court

therefore ruled in GOPAC’s favor

and dismissed the FEC’s complaint.

U.S. District Court for the

District of Columbia, 94-0828-LFO,

February 28, 1996. ✦
9

April 1996 Federal Election Commission RECORD

The Furgatch case involved a

communication that criticized

President Carter and included the

phrase: “Don’t let him do it.” The

court held that this communication

contained express advocacy and

supported this conclusion by noting

that the timing of the message

coincided with the eve of the 1980

Presidential general election. The

Court of Appeals reasoned that

language may be said to expressly

advocate a candidate’s election or

defeat if, when taken in context and

with limited reference to external

events, it can have no other reasonable interpretation.

District Court Decision

The court held that the Supreme

Court’s MCFL decision and a

decision of the Court of Appeals for

the First District in Faucher v. FEC

supported using Buckley’s list of

phrases as a bright-line test to detect

express advocacy. The rigid approach of a bright-line test, noted

the court, avoids the chilling of free

speech that occurs when the communicator is uncertain about whether

or not his or her message contains

express advocacy. Further, the idea

that a message’s content might

become express advocacy as an

election nears adds to the chilling

effect of 11 CFR 100.22(b) on free

speech.

The court recognized the difficulty the FEC faces in crafting a

regulation that effectively defines

express advocacy, but noted that the

Buckley, Faucher and MCFL

decisions required it to safeguard

First Amendment interests over the

interest of keeping corporate and

labor organization money out of the

electoral process. Based on these

precedents, therefore, the court ruled

that 11 CFR 100.22(b) was invalid

because it defined express advocacy

in broader terms than the Buckley,

MCFL and Faucher decisions.

Maine Right to Life

Committee v. FEC

On February 15, 1996, the U.S.

District Court for the District of

Maine ruled that the FEC’s regulation

at 11 CFR 100.22(b) exceeded the

FEC’s statutory authority because it

broadened the definition of express

advocacy beyond the Supreme

Court’s interpretation. Buckley v.

Valeo and Massachusetts Citizens

for Life v. FEC. This court case

marked the first judicial review of

the FEC’s definition of express

advocacy at 100.22.

Background

The Maine Right to Life Committee (MRLC) is a nonprofit membership corporation established for the

purpose of advocating pro-life

stances. MRLC uses its funds to

create and distribute a newsletter

that includes discussions of federal

candidates’ stances on pro-life issues.

Legal Analysis

The Federal Election Campaign

Act (the Act) contains a broad

prohibition against using corporate

and labor organization money in

connection with a federal election.

2 U.S.C. §441b.

The Supreme Court, citing First

Amendment concerns, explicitly

limited the scope of §441b in its

Buckley and MCFL decisions. The

Court held that the ban on corporate

and labor organization money could

only be constitutionally applied in

instances where the money is used

to expressly advocate the election or

defeat of a clearly identified candidate for federal office. The Buckley

decision listed examples of specific

phrases that the Court said constituted

express advocacy. The FEC incorporated this list in its definition of

express advocacy at 11 CFR 100.22(a).

However, subpart (b) of 11 CFR

100.22 is based, inter alia, on the

decision of the Court of Appeals for

the Ninth Circuit in FEC v. Furgatch.

FEC v. Legi-Tech

On February 16, 1996, the U.S.

Court of Appeals for the District of

Columbia Circuit reversed the

district court’s decision to dismiss

the FEC’s case against Legi-Tech.

See page 6 of the December 1994

Record for a summary of the district

court’s decision. The district court

had dismissed the case on October

12, 1994, based on the ruling of the

U.S. Court of Appeals for the

District of Columbia Circuit in FEC

v. NRA Political Victory Fund. See

page 2 of the December 1993

Record for a summary of that

decision.

Background

Legi-Tech used contributor

information drawn from FEC

disclosure reports to create a

computerized database that it

marketed to its subscribers. Some of

Legi-Tech’s subscribers in turn used

this database to solicit contributions.

The FEC found probable cause to

believe that Legi-Tech violated

2 U.S.C. §438(a)(4), which makes it

unlawful for anyone to use information disclosed with the FEC for

commercial purposes or for the

purpose of making solicitations. The

FEC and Legi-Tech were unable to

arrive at a conciliation agreement so

the FEC filed suit.

The District Court Decision

While the court was considering

the FEC’s suit, the U.S. Court of

Appeals for the District of Columbia

Circuit issued its decision in FEC v.

The court dismissed MRLC’s

other claims for injunctive and

declaratory relief (see page 3 of the

January 1996 Record).

U.S. District Court for the

District of Maine, 95-261-B-H,

February 15, 1996. ✦

(continued on page 10)
10

Federal Election Commission RECORD April 1996

NRA Political Victory Fund. In that

decision, the appeals court ruled that

the FEC’s structure was unconstitutional because, by having the Clerk

of the House and the Secretary of

the Senate as nonvoting ex officio

members, it violated the separation

of powers principle.

Following the NRA decision, the

FEC removed the ex officio members from its body and, in this new

form, ratified its former actions and

authorized its attorneys to continue

litigation against Legi-Tech. The

district court, however, said that

these corrective measures were not

enough. The court reasoned that,

because enforcement proceedings

against Legi-Tech had been initiated

by an unconstitutionally structured

FEC, the rule set forth in Harper v.

Virginia Department of Taxation—

that a newly enunciated rule of law

must be retroactively applied to

pending cases—had to be applied in

this case. For this reason, the district

court dismissed this case.

The Appeals Court’s Decision

While the appeals court did not

object to the district court’s application of the Harper rule in this case,

it disagreed that dismissal was the

Court Cases

(continued from page 9)

Federal Register

Federal Register notices are

available from the FEC’s Public

Records Office.

1996-8

Filing Dates for the Oregon

Special Elections (61 FR 6837,

February 22, 1996)

1996-9

11 CFR 100, 102, 109, 110 and

114: Corporate and Labor

Organization Activity, Express

Advocacy and Coordination with

Candidates; Announcement of

Effective Date (61 FR 10269,

March 13, 1996)

only remedy.

In its decision, the appeals court

pointed out that: “Even were the

Commission to return to square

one—assuming the statute of

limitations were not a bar—it is

virtually inconceivable that its

decisions would differ in any way

the second time from that which

occurred the first time.”

Most of the Commissioners who

originally voted to find probable

cause that Legi-Tech had violated

§438(a)(4) and, subsequently, voted

to initiate a lawsuit against LegiTech, are still on the Commission

and would likely vote the same way

now as they had before, reasoned

the court. The court noted that it can

not “examine the internal deliberations of the Commission, at least

absent a contention that one or more

of the Commissioners were actually

biased.”

Therefore, instead of dismissal,

the appeals court said that “the

better course is to take the FEC’s

post-reconstitution ratification of its

prior decisions at face value and

treat it as an adequate remedy for

the NRA constitutional violation.”

U.S. Court of Appeals for the

District of Columbia Circuit (94-

5379), D.Ct.No. 91-0213, February

16, 1996. ✦

RNC v. FEC (94-1017)

On February 20, 1996, the U.S.

Court of Appeals for the District of

Columbia Circuit affirmed most of

the district court’s decision1

 upholding the FEC’s “best efforts” regulation. 11 CFR 104.7(b). The only

part of the district court’s decision

that the court of appeals did not

affirm was the FEC’s requirement

that specific language accompany

solicitations and follow-up requests

for contributor information. The

1 See page 8 of the September 1994

Record for a summary of the district

court’s decision.

court of appeals found the mandatory language prescribed in the

regulation to be misleading and

therefore contrary to law.

The “Best Efforts” Rules

The Federal Election Campaign

Act (the Act) requires political

committees to show best efforts to

obtain and report the name, address,

occupation and employer of any

individual who makes contributions

of more than $200 in a single year to

the committee. 2 U.S.C. §§431(13),

432(i) and 434(b)(3)(A).

In 1994, due to low rates of

disclosure of contributor information, the FEC implemented a

regulation that defined “best efforts”

to obtain contributor information.

11 CFR 104.7(b). This regulation

required committees to place the

following statement conspicuously

on solicitation materials: “Federal

law requires political committees to

report the name, mailing address,

occupation and name of employer

for each individual whose contributions aggregate in excess of $200 in

a calendar year.”

Additionally, this regulation

required committees to send a standalone, follow-up request for contributor information in instances

where the contributor failed to

respond to the original request or

provided incomplete information.

The follow-up request also had to

include the statement noted above.

Committees were allowed to include

an expression of gratitude for the

contribution in this follow-up

request, but no other extraneous

information was permitted.

The Legality of a Stand-Alone,

Follow-Up Request

The court found the FEC’s

regulation reasonable because

nothing in the statute or its legislative history precluded the FEC from

requiring committees to make more

than one request for contributor

information. Chevron U.S.A. v.

Natural Resources Defense Council,

467 U.S. 837 (1984).
11

April 1996 Federal Election Commission RECORD

(continued on page 12)

The court also concluded that the

new regulation was based on a

reasoned analysis. Motor Vehicle

Mfrs. Ass’n v. State Farm Mut.

Auto. Ins. Co., 463 U.S. 29, 57

(1983). The court noted that the

FEC was concerned about the

number of committees submitting

reports with a low rate of complete

contributor information. The FEC

held a public comment period and

drafted 11 CFR 104.7(b) based on

the public comments it received.

The court concluded, “the Commission’s new regulation results from

exactly the kind of agency balancing

of various policy considerations to

which courts should generally defer.”

The Trouble With the Mandatory

Language

The court did not question the

FEC’s authority to require specific

language on a follow-up request for

contributor information. However,

the court found that the mandatory

language at 11 CFR 104.7(b) was

inaccurate and misleading.

The language was inaccurate, the

court said, because the Act does not

require committees to report full

contributor information for each

donor; rather, it only requires them

to undertake “best efforts” to obtain

it. The court found that 11 CFR

104.7(b) had the effect of forbidding

a more accurate paraphrasing of the

law, such as: “Federal law requires

us to use our best efforts to collect

the information.”

Additionally, the mandatory

language was misleading, the court

said, because it led readers to infer

that federal law required contributors

to disclose this information. In fact,

neither the Act nor any other federal

law requires contributors to do so.

For these reasons, the court ruled

that the mandatory language at

11 CFR 104.7(b) was unreasonable

and contrary to law.

First Amendment Issues

The RNC posed First Amendment issues with regard to both the

stand-alone, follow-up notice and

the specific mandatory language at

11 CFR 104.7(b). Having invalidated

the specific mandatory language on

statutory grounds, the court only

addressed the constitutional arguments put forth by the RNC with

respect to the follow-up notice.

The RNC had argued that the

requirement to incur additional costs

to send out additional messages was

not narrowly tailored to the interests

the Supreme Court had identified in

Buckley v. Valeo. The court of

appeals, however, found that the

best efforts provision was essentially a safe harbor for political

committees that was added to the

Act after the Supreme Court upheld

a more stringent and absolute FEC

requirement in Buckley. As an

optional safe harbor, it was thus less

burdensome than the absolute

disclosure requirement that had

previously been found consistent

with the First Amendment.

The court also noted that the

stand-alone request was a contentneutral restriction on speech and that

the RNC had other avenues, besides

the follow-up notice, for communicating with donors. The court also

found unconvincing the RNC’s

argument that the follow-up requirement sapped the committee’s

resources. The court noted that: “Even

at the [RNC’s] estimate of up to $6

per follow-up request, the cost is only

about three percent of a $200 contribution, an amount not likely to inhibit

political committees from ‘speaking.’”

U.S. Court of Appeals for the

District of Columbia Circuit (94-

5248), D.Ct. No. 94-1017, February

20, 1996. ✦

FEC v. National Right to

Work Committee (90-0571)

On February 15, 1996, the U.S.

District Court for the District of

Columbia ruled that the FEC was

barred from suing for a civil penalty

in this case because the 5-year

statute of limitations had expired.

28 U.S.C. §2462. Additionally, the

court ruled that injunctive relief was

not warranted because the defendant

had not violated the law again for

more than 10 years.

Background

The National Right to Work

Committee (NRWC) is a nonprofit

corporation that defends workers’

rights to refuse to join or support a

labor union. In 1984, the NRWC

spent $100,000 to hire private

detectives to infiltrate the AFL-CIO,

the National Education Association

(NEA) and the Mondale for President Committee for the purpose of

gathering evidence that the unions

were using their general treasury

monies to provide support to Walter

Mondale’s Presidential effort. (The

use of labor union money in connection with a federal election is

prohibited by 2 U.S.C. §441b.) The

NRWC used the information

gathered by its hired detectives to

file administrative complaints with

the FEC.

In October 1984, the NEA filed

an administrative complaint with the

FEC that accused the NRWC of

violating the same federal election

laws that the NRWC had accused

the NEA of violating. The NEA

complaint contended that the

NRWC’s payment of $100,000

represented illegal contributions and

expenditures because the payments

funded the services of detectives
12

Federal Election Commission RECORD April 1996

Court Cases

(continued from page 11)

who, in the course of conducting

their clandestine information

gathering, rendered services to the

Mondale campaign.

On May 23, 1989, the Commission found “probable cause” that the

NRWC had violated §441b. On

March 13, 1990, the FEC filed this

lawsuit.

Statute of Limitations

In general, federal government

agencies must initiate proceedings

to assess civil penalties, fines and

forfeitures within 5 years from “the

date when the claim first accrued.”

28 U.S.C. §2462. In FEC v. National Republican Senate Committee,

the court ruled that this statute of

limitations applied to the FEC and

that the statute of limitations began

to run when the alleged offense was

committed. See page 4 of the April

1995 Record. The FEC conceded

that the NRWC’s hired detectives

ceased their undercover operations

by September 1984. The court noted

that the Commission did not file this

lawsuit until March of 1990. The

court concluded that the 5-year

statute of limitations ran out on this

case and the FEC was therefore

barred from pursuing a civil penalty

in this matter.

Furthermore, the court ruled that

because the FEC failed to put forth

any compelling evidence that the

NRWC had violated the law since

1984, it was both unnecessary and

unwarranted to issue injunctive

relief.

U.S. District Court for the

District of Columbia, 90-0571,

February 15, 1996. ✦

Compliance

Maryland and Texas PrePrimary Nonfilers

The Jim Plack for Congress

committee was the only candidate

committee that failed to file a 1996

pre-election report for Maryland’s

March 5, House primary election.

This committee is Jim Plack’s

principal campaign committee for

the U.S. House seat representing

Maryland’s 1st district. See the FEC

press release of March 1, 1996.

The Friends of Jim Broyles

committee was the only candidate

committee that failed to file a 1996

pre-election report for Texas’s

March 12, House primary election.

Jordan v. FEC

On November 3, 1995, the U.S.

Court of Appeals for the District of

Columbia Circuit remanded this

case to the district court with

instructions to dismiss for lack of

jurisdiction.

Absalom Jordan brought this case

before the courts seeking judicial

review of the FEC’s decision to

dismiss an administrative complaint

he had filed. The district court ruled

in favor of the FEC, upholding its

decision to dismiss the complaint.

The court of appeals, however,

noted that the FEC dismissed Mr.

Jordan’s complaint on July 24,

1991, and that Mr. Jordan did not

file suit with the district court until

September 25, 1991. Under 2 U.S.C.

§437g(a)(8)(B), a petition to review

an FEC decision to dismiss an

administrative complaint must be

filed within 60 days after the date of

dismissal. The court ruled that the

60-day period began when the

Commission voted to dismiss the

complaint, and not on the date of the

FEC’s letter informing Mr. Jordan

of the dismissal. When Mr. Jordan

received the FEC’s letter informing

him of the dismissal, he had 53 days

left on the 60-day limit in which to

file a suit. He did not file suit with

the district court until 63 days after

the FEC voted to dismiss his

complaint. As a result, the court of

appeals ruled that the courts lacked

jurisdiction to review this case. On

January 23, 1996, the district court

carried out the appeals court’s

instructions to dismiss this case.

U.S. Court of Appeals for the

District of Columbia Circuit (94-

5216), D.Ct. No. 91-2428, November 3, 1995. ✦

FEC v. Hartnett for U.S.

Senate, et al.

On January 25, 1996, the U.S.

District Court for the District of

Columbia granted the FEC’s request

for voluntary dismissal. The FEC

and the defendants agreed to settle

this case.

The FEC brought this suit to

enforce a civil penalty assessed

against the Hartnett for U.S. Senate

committee and its treasurer, Paul

Meierer, for failing to comply with

the 48-hour reporting requirements

at 2 U.S.C. §434(a)(6)(A). Subsequent to the filing of this lawsuit,

Mr. Meierer made a payment, which

the FEC agreed to accept to settle

this matter.

U.S. District Court for the

District of Columbia, 95-1829,

January 25, 1996. ✦
13

April 1996 Federal Election Commission RECORD

excessive contributions; failure to

file 48-hour reports; failure to report

expenditures; failure to maintain

proper recordkeeping for disbursements; incorrect reporting of

candidate as source of loans;

candidate loans from other than

personal funds; contribution by

national bank

Disposition: (a-b) $7,000 civil

penalty (all of the above except for

contribution by national bank); (c)

$1,300 (excessive contribution); (de) reason to believe, but took no

further action (excessive contributions); (f) reason to believe, but took

no further action (contribution by

national bank)

MUR 4229

Respondent: Friends of Bernadette

Castro Committee, E. Edgar

Cosman, treasurer (NY)

Complainant: FEC initiated (RAD)

Subject: Failure to file 48-hour

report (candidate loan of $352,810)

Disposition: $22,000 civil penalty

MUR 4256

Respondent: Levin for Congress,

Joseph J. O’Brien, treasurer (MI)

Complainant: FEC initiated (RAD)

Subject: Failure to file 48-hour

reports

Disposition: $4,500 civil penalty

MUR 4269

Respondents: North Dakota

Republican Party, David P.

Vanderscoff, treasurer (ND)

Complainant: FEC initiated (RAD)

Subject: Failure to file disclosure

reports timely

Disposition: $4,000 civil penalty

MUR 4276

Respondent: Inlandboatmen’s

Union Political Action Committee,

Terri Mast, treasurer (WA)

Complainant: FEC initiated (RAD)

Subject: Failure to file disclosure

reports timely

Disposition: $1,375 civil penalty ✦

MURs Released to the Public

Listed below are summaries of

FEC enforcement cases (Matters

Under Review or MURs) recently

released for public review. This

listing is based on the FEC press

releases of March 1 and 8. Files on

closed MURs are available for

review in the Public Records Office.

MUR 3708 (reopened, see January

1995 Record, page 10, DSCC v.

FEC (93-1321))

Respondents: (a) National Republican Senatorial Committee, Maureen

Goodyear, treasurer (DC);

(b) Coverdell Senate Committee,

Marvin Smith, treasurer (GA)

Complainant: Democratic Senatorial Campaign Committee

Subject: Excessive coordinated

expenditures

Disposition: (a) $5,000 civil

penalty; (b) took no action (district

court’s remand order encompassed

the National Republican Senatorial

Committee only)

MUR 4166

Respondents: (a) The Honorable

Jim Bates (CA); (b) Jim Bates for

Congress Committee, Jim Bates,

treasurer (CA); (c) Mark A.

Battaglia (CA); (d) David L. Bain

(CA); (e) Sami I. Bandak (CA);

(f) San Diego National Bank (CA)

Complainant: FEC initiated (Audit)

Subject: Corporate contributions;

labor organization contributions;

This committee is Jim Broyles’s

principal campaign committee for

the U.S. House seat representing

Texas’s 11th district. See the FEC

press release of March 8, 1996.

The FEC is required by law to

publicize the names of nonfiling

candidate committees. 2 U.S.C.

§438(a)(7). The FEC pursues

enforcement actions against nonfilers

on a case-by-case basis. ✦

Change of Address

Political Committees

Treasurers of registered

political committees automatically receive the Record. A

change of address by a political

committee (or any change to

information disclosed on the

Statement of Organization) must,

by law, be made in writing on

FEC Form 1 or by letter. The

treasurer must sign the amendment and file it with the Secretary

of the Senate, the Clerk of the

House or the FEC (as appropriate) and with the appropriate state

office.

Other Subscribers

Record subscribers who are not

registered political committees

should include the following

information when requesting a

change of address:

• Subscription number (located on

the upper left corner of the

mailing label);

• Subscriber’s name;

• Old address; and

• New address.

Subscribers (other than

political committees) may correct

their addresses by phone as well

as by mail.
Authority to Make Coordinated Party Expenditures on Behalf

of House, Senate and Presidential Nominees

National Party Committee May make expenditures on behalf of House,

Senate and Presidential nominees. May

authorize 1

 other party committees to make

expenditures against its own spending limits.

Shares limits with national congressional and

senatorial campaign committees.

State Party Committee May make expenditures on behalf of House

and Senate nominees seeking election in the

committee’s state. May authorize 1 other party

committees to make expenditures against its

own spending limits. May be authorized 1

 by

national committee to make expenditures on

behalf of Presidential nominee that count

against national committee’s limit.

Local Party Committee May be authorized 1

 by national or state party

committee to make expenditures against their

limits.

1 The authorizing committee must provide prior, written authorization specifying the

amount the committee may spend.

1996 Coordinated Party

Expenditure Limits

The 1996 coordinated party

expenditure limits are now available. They are:

• $11,994,007 for Presidential

nominees;

• $30,910 for House nominees;1

 and

• A range from $61,820 to $1,409,249

for Senate nominees, depending on

each state’s voting age population.

Party committees may make

these special expenditures on behalf

of their 1996 general election

nominees. National party committees have a separate limit for each

nominee, but they share their limits

with their national senatorial and

congressional committees. Each

state party committee has a separate

limit for each House and Senate

nominee in its state. Local party

committees do not have a limit. One

party committee may authorize

another party committee to make an

expenditure against its limit. Local

committees may only make coordinated party expenditures with

advanced written authorization from

another committee.

Coordinated party expenditure

limits are separate from the contribution limits; they also differ from

contributions in that the party

committee must spend the funds on

behalf of the candidate rather than

give the money directly to the

campaign. Although these expenditures may be made in consultation

with the candidate, only the party

committee making the expenditure—not the candidate committee—

Party

Activities

Calculating Coordinated Party Expenditure Limits

Amount Formula

Presidential Nominee $11,994,007 2¢ x VAP 1 x COLA2

Senate Nominee See table on The greater of:

facing page $20,000 x COLA or

2¢ x state VAP x COLA

House Nominee in States

with Only One Representative $61,820 $20,000 x COLA

House Nominee in Other States $30,910 $10,000 x COLA

Nominee for Delegate or

Resident Commissioner 3 $30,910 $10,000 x COLA

1 VAP means voting age population. VAP figures are not yet official.

2 COLA means cost-of-living adjustment. The 1996 COLA is 3.091.

3 The District of Columbia, Guam and the Virgin Islands elect Delegates; Puerto

Rico elects a Resident Commissioner.

1 In states that have only one U.S.

House Representative, the coordinated

party expenditure limit for the House

nominee is $61,820, the same amount

as the Senate limit.

(continued on page 15)

14

Federal Election Commission RECORD April 1996
Coordinated Party Expenditure Limits for ’96 Senate Nominees

Voting Age Population1 Expenditure

State (in thousands) Limit

Alabama 3,173 $ 196,155

Alaska* 414 $ 61,820

Arizona 3,025 $ 187,006

Arkansas 1,834 $ 113,378

California 22,796 $1,409,249

Colorado 2,765 $ 170,932

Connecticut 2,477 $ 153,128

Delaware* 538 $ 61,820

Florida 10,794 $ 667,285

Georgia 5,277 $ 326,224

Hawaii 878 $ 61,820

Idaho 815 $ 61,820

Illinois 8,704 $ 538,081

Indiana 4,316 $ 266,815

Iowa 2,117 $ 130,873

Kansas 1,873 $ 115,789

Kentucky 2,888 $ 178,536

Louisiana 3,103 $ 191,827

Maine 936 $ 61,820

Maryland 3,770 $ 233,061

Massachusetts 4,642 $ 286,968

Michigan 7,030 $ 434,595

Minnesota 3,364 $ 207,962

Mississippi 1,935 $ 119,622

Missouri 3,942 $ 243,694

Montana* 634 $ 61,820

Nebraska 1,194 $ 73,813

Nevada 1,132 $ 69,980

New Hampshire 853 $ 61,820

New Jersey 5,982 $ 369,807

New Mexico 1,185 $ 73,257

New York 13,599 $ 840,690

North Carolina 5,396 $ 333,581

North Dakota* 471 $ 61,820

Ohio 8,291 $ 512,550

Oklahoma 2,400 $ 148,368

Oregon 2,344 $ 144,906

Pennsylvania 9,163 $ 566,457

Rhode Island 752 $ 61,820

South Carolina 2,729 $ 168,707

South Dakota* 523 $ 61,820

Tennessee 3,946 $ 243,942

Texas 13,324 $ 823,690

Utah 1,277 $ 78,944

Vermont* 438 $ 61,820

Virginia 5,006 $ 309,471

Washington 4,013 $ 248,084

West Virginia 1,406 $ 86,919

Wisconsin 3,770 $ 233,061

Wyoming* 344 $ 61,820

* In these states, which have only one U.S. House Representative, the spending limit

for the House nominee is $61,820, the same amount as the Senate limit. In other

states, the limit for each House nominee is $30,910.

1 These figures are not yet official. In the unlikely event that the official figures

differ, a future Record will notify readers.

Party Activities

(continued from page 14)

15

April 1996 Federal Election Commission RECORD

must report them. (Coordinated

party expenditures are reported on

FEC Form 3X, line 25, and are

always itemized on Schedule F,

regardless of amount.)

The accompanying tables include: information on which party

committees have the authority to

make coordinated party expenditures; the formula used to calculate

the coordinated party expenditure

limits; and a listing of the state-bystate coordinated party expenditure

limits. ✦

Advisory

Opinions

Advisory Opinion Requests

Advisory opinion requests are

available for review and comment in

the Public Records Office.

AOR 1996-4

Publicly funded Presidential campaign’s

assignment of entitlement to another

entity (Lyndon LaRouche; February

9, 1996; 2 pages)

AOR 1996-5

Refunding contributions made in the

name of another (Jay Kim for

Congress; February 13, 1996; 2

pages plus 4-page attachment)

AOR 1996-6

Establishment of PAC by domestic

subsidiary of foreign corporation

(Barrick Goldstrike Mines, Inc.;

February 13, 1996; 4 pages plus 12-

page attachment)

AOR 1996-7

May a Presidential campaign receive

public funding certification but

refuse matching funds (Harry Browne

for President; February 20, 1996; 2

pages plus 4-page attachment) ✦
16

Federal Election Commission RECORD April 1996

Public Funding

Alan Keyes Declared Eligible

For Matching Funds

On February 13, 1996, Republican Alan Keyes became the eleventh

1996 Presidential candidate to

become eligible to receive public

matching funds. See the chart below

for a list of the eleven candidates

certified to receive public funding.

To be eligible to receive public

funding, a candidate must submit

documentation to the FEC showing

campaign receipts in excess of

$5,000 in matchable contributions in

each of at least 20 states. Only

contributions received from individuals, and only up to $250 of a

contributor’s total, are matchable.

The candidate must also certify that

he or she will abide by spending

limits and use funds for campaignrelated expenses only. Additionally,

the candidate must agree to an FEC

audit of his or her campaign and

otherwise comply with election law.

Once Presidential candidates

establish eligibility for matching

funds, they may submit additional

contributions for matching fund

consideration on a monthly basis. ✦

Mid-March Matching Fund

Payment

In mid-March, the U.S. Treasury

disbursed $7,072,308 in matching

funds to 11 certified Presidential

candidates. This disbursement was

the fourth matching fund disbursement of 1996, and represented 35

percent of each candidate’s unpaid

entitlement as of that day.

Certified 1996 candidates are not

receiving their full entitlements due

to a public funding shortfall. (See

page 13 of the January 1996 Record.)

Instead, all certified candidates are

receiving the same percentage of

their entitlement, based on the

monies available at the time of the

pay out. The U.S. Treasury has

decided to make unscheduled pay

outs to lessen the impact of the

shortfall on the candidates.

The first disbursement to 1996

certified candidates totaled $22,384,654

and was made on January 2, 1996,

but only covered about 60 percent of

the initial certifications for the 10

candidates then certified. The second

payment was made on February 2,

and totaled $198,013 for 10 candidates, representing less than 1 percent

of the then-certified amount. The

third payment was made on February 13, and totaled $550,538 for 10

candidates, representing 3 percent of

the then-certified amount.

Alan Keyes did not receive any

public money from the first three

disbursements because he was not

certified until February 13, 1996.

The accompanying chart lists the

amount of each candidate’s midMarch public funding pay out.

The Presidential Public Funding

Program is financed by taxpayers

participating in the voluntary $3

“check off” found on all U.S.

federal income tax forms. ✦

Mid-March Public Funding

Payments

Mid-March

Candidate Payment

Bill Clinton (D) $1,860,011

Bob Dole (R) $1,737,588

Phil Gramm (R)* $1,025,192

Pat Buchanan (R) $ 997,310

Lamar Alexander (R)* $ 565,242

Richard Lugar (R)* $ 360,347

Pete Wilson (R)* $ 230,840

Arlen Specter (R)* $ 140,799

Lyndon LaRouche (D) $ 74,931

John Hagelin (NLP) $ 44,942

Alan Keyes (R) $ 35,100

* These candidates have dropped out of

the 1996 Presidential race.

Hearing on Fulani

Repayment Determination

At a February 7, 1996, public

hearing, Dr. Lenora B. Fulani

contested the FEC’s August 1995

initial repayment determination that

her campaign committee repay

$612,557 to the U.S. Treasury.1

 The

FEC had based this repayment

determination on an FEC investigation into charges made by former

campaign worker Kellie Gasink in

January 1994.2

The FEC will decide what action

to take after considering Dr. Fulani’s

presentation and all the documentation submitted by her committee.

Revised Repayment Based on

Investigation

Ms. Gasink had alleged that Dr.

Fred Newman, Dr. Fulani’s campaign manager, used a network of

vendors to funnel campaign funds to

himself. Ms. Gasink had claimed

that these vendors billed expenses to

the committee that were either

inflated or fabricated. Additionally,

1 Dr. Fulani requested this hearing

despite her belief that the FEC was

barred from pursuing this matter

because the 3-year statute of limitation

for issuing an initial repayment

determination had expired. This initial

repayment determination came after

and was separate and in addition to the

initial determination contained in the

Final Audit Report; that report set the

committee’s repayment obligation at

$1,394 (the pro-rata portion of $3,235

in lost money orders). The committee

paid this amount to the U.S. Treasury

without dispute. See page 6 of the June

1994 Record for a summary of the

Final Audit Report.

2 See page 9 of the December 1994

Record (AO 1994-32) and page 8 of the

April 1995 Record (AO 1995-1) for

summaries of advisory opinions related

to Ms. Gasink’s allegations. See also

page 11 of the August 1994 Record and

page 12 of the June 1995 Record for

articles on a related law suit (Fulani v.

FEC).
17

April 1996 Federal Election Commission RECORD

Ms. Gasink had alleged that Dr.

Newman embezzled campaign funds

by reporting that certain individuals

received salary payments and

reimbursements when actually they

had not.

Ms. Gasink’s allegations led the

FEC to conduct an investigation that

concluded that the Fulani committee

had to repay $612,557 to the U.S.

Treasury. This amount consisted of

(rounded down to the dollar):

• $381,171 for nonqualified expenses to vendors that appeared to

have been paid for goods/services

that they did not provide or were

overpaid for goods/services that

they did provide;

• $98,095 for nonqualified expenses

in salary and reimbursement

checks to individuals that were

cashed by a third party and could

not be traced to the original payee;

and

• $133,289 for public funds received

in excess of entitlement, based on

the campaign’s use of public funds

for the nonqualified expenses

noted above.

The FEC based this repayment

determination on a review of

information provided by the Fulani

committee, a number of its vendors,

its campaign depository and other

sources. Additionally, the FEC

based its determination on adverse

inferences drawn from the fact that

the committee treasurer and campaign manager refused to appear for

depositions. Further, the FEC

regarded the questioned expenses as

undocumented because the committee failed to submit subpoenaed

documents on time. The Fulani

committee disputes this repayment

determination and has provided

additional materials to support the

points made by Dr. Fulani at the

public hearing. The FEC will

consider these additional materials

and Dr. Fulani’s comments at the

hearing before making its final

repayment determination.

Payments to Vendors

Dr. Fulani’s campaign contracted

with vendors that were owned by or

employed persons affiliated with her

party, the New Alliance Party. Dr.

Newman was one of the persons

who was involved with both the

Fulani campaign and the vendors.

Based on this interconnected

relationship, the FEC concluded that

these vendors were not at “arms

length” from the campaign and were

thus in a position that would have

allowed Dr. Newman to use them to

embezzle campaign funds, as

alleged by Gasink. But, Dr. Fulani

argued, the FEC relied on an

incorrect standard for detecting

nonqualified campaign expenses.

Additionally, the committee stated

that it had provided the FEC with

sufficient documentation to revise

this aspect of the determination.

Payments to Individuals

In its August 1995 initial repayment determination, the FEC

determined that $227,691 in salary

payments and reimbursements to

individuals were nonqualified

campaign expenses because the

checks they were written on were

doubly endorsed and because payees

testified that they did not receive the

money cashed under their names.

The FEC determined that further

documentation was needed to prove

that the money had actually gone to

the original payee. Absent such

documentation, the FEC determined

that the Fulani campaign had to

repay $98,096, representing the

public funds used to make these

payments.

In arguing against this determination, Dr. Fulani explained that her

campaign functioned as part of a

“socialist collective,” wherein all

members accepted and understood

that their time and money belonged

to the collective as a whole. This

philosophy impacted on the Fulani

campaign’s method of making

salary and reimbursement payments

to collective members. For instance,

according to Dr. Fulani, it was

accepted and understood by members of the collective that the

campaign treasurer or other campaign staff member could cash their

checks for them without needing to

secure their signature, and that, in

certain circumstances, the money

owed them could be kept in the

collective rather than actually given

to the individual. This sentiment

was echoed in affidavits from

campaign workers submitted by the

Fulani campaign.

The committee also stated that

the FEC incorrectly included the

following in its collection of doubly

endorsed checks: 65 checks that had

been endorsed only once; 113

checks that included the notation

“OK to cash” followed by a campaign staffers initials, which, the

committee explained, the campaign’s

bank required in order to issue cash

to persons who did not have bank

accounts there; and 20 checks that

were money order purchases and

therefore, maintained Dr. Fulani,

were not disbursements but “asset

exchanges.”

The committee also criticized Ms.

Gasink for lacking personal knowledge of the events surrounding the

Fulani campaign. ✦

Need FEC Material

in a Hurry?

Use the FEC’s Flashfax service

to obtain FEC material fast. It operates 24 hours a day, 7 days a

week. Over 300 FEC documents—reporting forms, brochures, FEC regulations—can be

faxed almost immediately.

Use a touch tone phone to dial

202/501-3413 and follow the instructions. To order a complete

menu of Flashfax documents,

enter document number 411 at the

prompt.
Index

The first number in each citation

refers to the “number” (month) of

the 1996 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

1995-38: Corporate vendor and

nonconnected PAC with common

officer, 1:14

1995-40: Disaffiliation of PACs, 3:7

1995-41: Preemption of state

disclosure requirements, 2:3

1995-42: Using campaign funds to

pay child-care expenses, 2:3

1995-43: Refunding legal fees to

candidate committee, 3:8

1995-44: Presidential primary

candidate excused from filing 48-

hour notices, 3:8

1995-45: Qualified campaign

expenses for ballot access, 3:9

1995-46: Purchase of candidate’s

book by his campaign, 3:9

1995-48: Preemption of Georgia law

limiting receipt of contributions,

3:10

Court Cases

FEC v. _____

– Democratic Senatorial Campaign

Committee (95-2881), 1:5

– GOPAC, 4:1

– Hartnett, 4:12

– Legi-Tech, 4:9

– National Right to Work, 4:11

– Parisi, 3:6

_____ v. FEC

– Center for Responsive Politics, 1:3

– Chamber of Commerce of the

U.S.A., et al., 1:2

– Hooker, 3:7

– Jordan, 4:12

– Maine Right to Life Committee,

1:3; 4:9

– Minnesota Citizens Concerned for

Life, 3:6

– Republican National Committee

(94-1017), 4:10

– Stockman, 2:9

– Whitmore, 3:6

Reports

Electronic filing system, FEC

authorized to develop, 2:2

Point of entry change for House

candidates, 2:1

Schedule for 1996, 1:5

Special elections

– House, California’s 37th district,

2:5

– House, Maryland’s 7th district,

3:2

– House, Oregon’s 3rd district, 3:2

800 Line

Ballot access payments, 2:8

Conventions, permissible corporate

and labor activity, 2:7

Statistics

1995 Year-End PAC Count

As of December 31, 1995, there

were 4,016 PACs registered with the

FEC. This represents a net increase

of 34 PACs since the midyear PAC

count taken July 1, 1995. (The

number of PACs does not necessarily correspond with PAC financial

activity, since many registered

PACs have little or no activity.)

The accompanying table shows

midyear and year-end PAC counts

since the start of the 1990s. The

total is broken down by PAC type.

A January 23, 1996, FEC press

release contains similar figures

dating back to 1974’s year-end PAC

count. This press release may be

ordered through the Flashfax

system; dial 202/501-3413 and

request document 526. ✦

PACs in the ’90s: Midyear and Year-End PAC Counts

Trade/ Corp. w/o

Member/ Coop- Capital NonCorporate Labor Health erative Stock connected 1 Total

Jul. ’90 1,782 346 753 58 139 1,115 4,193

Dec. ’90 1,795 346 774 59 136 1,062 4,172

Jul. ’91 1,745 339 749 57 137 1,096 4,123

Dec. ’91 1,738 338 742 57 136 1,083 4,094

Jul. ’92 1,731 344 759 56 144 1,091 4,125

Dec. ’92 1,735 347 770 56 142 1,145 4,195

Jul. ’93 1,715 338 767 55 139 1,011 4,025

Dec. ’93 1,789 337 761 56 146 1,121 4,210

Jul. ’94 1,666 336 777 53 138 963 3,933

Dec. ’94 1,660 333 792 53 136 980 3,954

Jul. ’95 1,670 334 804 43 129 1,002 3,982

Dec. ’95 1,674 334 815 44 129 1,020 4,016

1 Nonconnected PACs must use their own funds to pay fundraising and administrative expenses, while the other categories of PACs have corporate or labor “connected organizations” that are permitted to pay those expenses for their PACs. On

the other hand, nonconnected PACs may solicit contributions from the general

public, while solicitations by corporate and labor PACs are restricted.

18

Federal Election Commission RECORD April 1996
19

April 1996 Federal Election Commission RECORD
FEDERAL ELECTION COMMISSION

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Federal Election Commission RECORD April 1996

FEC Seeks Comments on Electronic Filing

A Notice of Proposed Rulemaking on Electronic Filing

(11 CFR 104.18) appeared in the Federal Register during the

last week of March. Electronic filing will not be a filing

option until 1997. The proposed rules address a variety of

issues, including:

• The establishment of format specifications for data

submitted in an electronic format;

• Procedures for submitting amendments to reports; and

• Methods of satisfying signature requirements under the

law.

The FEC seeks comments on the proposed rules from the

public, especially committees, vendors and other

jurisdictions that have implemented similar systems. The

May Record will carry an article describing the proposed

rules, but persons interested in participating in the comment

process should look for the Notice of Proposed Rulemaking

in the Federal Register, since the 60-day comment period

will begin once the notice is published.

Unfortunately, the April Record went to press before

the notice was published in the Federal Register, so

an exact date and page cite could not be printed here.

However, copies of the proposed rules may be

obtained from the FEC’s Public Records Office: call

800/424-9530 or 202/219-4140. Alternatively, use

the FEC’s automated Flashfax system to have a copy

faxed to you: call 202/501-3413 and request

document 234.

Persons interested in commenting on the proposed

rules must submit their comments in writing within

the 60-day comment period. Comments should be

addressed to:

Susan E. Propper, Assistant General Counsel

999 E Street, NW

Washington, DC 20463