August 1999 Federal Election Commission Volume 25, Number 8

Table of Contents

Public Funding

1 Estimated Funding for 2000

Primaries

2 McCain Eligible for Matching

Funds

2 Preliminary Spending Limits for

2000 Presidential Election

3 Convention Funding for Major

Parties

Regulations

1 Final Rules Governing LLCs

4 Advisory Opinions

Electronic Filing

5 FECFile Classes Set for August

Election Administration

5 Members Named to Advisory Panel

5 Impact of National Voter

Registration Act in 1997-98

Compliance

6 MUR 4879

6 MURs 4797/4798

7 Federal Register

Outreach

7 FEC Conference Schedule

7 Monthly Roundtable Sessions

800 Line

8 Testing the Waters

Reports

9 California Special General

Election Reporting

Information

10 Guidelines Modified for

Presidential, Vice Presidential

Personal Disclosure Statements

 11Index

(continued on page 3)

Public Funding

Adjustment to Estimated

Public Funding Available for

2000 Primaries

FEC staff has revised the estimated public funding available for

the 2000 primary elections based on

the recent announcement by Texas

Governor George W. Bush that he

will forego the federal matching

funds. In May 1999, the Record

(May 1999 Record, p. 1) reported

the estimated payout for the 2000

election cycle to be $98.7 million. In

light of Governor Bush’s announcement, that estimate has been revised

to $81.9 million.

While the shortfall in funds will

still be significant, FEC staff now

estimates that all certified funds will

be paid by July 20, 2000. The initial

payout, to occur on January 2, 2000,

is estimated to be 39 cents on the

dollar.

As with the previous estimates,

these figures do not take into

consideration reported fundraising

proceeds or other indicators, which

could result in a different estimate.

For previous articles about the

shortfall, see the May 1999 Record,

p. 1, and July 1998 Record, p. 1.✦

Regulations

Final Rules Governing

Contributions by LLCs

Before Congress

On June 24, 1999, the FEC

approved final rules and an explanation and justification governing

contributions to federal campaigns

by limited liability companies

(LLCs). The final rules were

published in the July12, 1999

Federal Register and transmitted to

Congress for a 30-day legislative

review period on June 25, 1999.

Unless Congress and the President

disapprove the regulations, they will

go into effect after the review

period. The new regulations can be

found at 11 CFR 110.1(g), and they

supersede Advisory Opinions (AOs)

1998-15, 1998-11, 1997-17, 1997-4,

1996-13 and 1995-11.

The new rules follow to the

Internal Revenue Service’s “check

the box” approach in classifying

LLCs. IRS rules allow LLCs to

decide whether to be treated as

partnerships or corporations for

federal tax purposes. If an LLC

selects neither option, and is not

traded publicly, it is automatically

treated as a partnership. All publicly-traded LLCs are treated as

corporations.
Federal Election Commission RECORD August 1999

2

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

202/694-1100

202/501-3413 (FEC Faxline)

202/219-3336 (TDD for the

 hearing impaired)

800/877-8339 (FIRS)

Scott E. Thomas, Chairman

Darryl R. Wold, Vice Chairman

Lee Ann Elliott, Commissioner

David M. Mason, Commissioner

Danny L. McDonald,

 Commissioner

Karl J. Sandstrom, Commissioner

James A. Pehrkon, Staff Director

Lawrence M. Noble, General

 Counsel

Published by the Information

 Division

Louise D. Wides, Director

Cheryl Fowle, Editor

http://www.fec.gov

Public Funding

(continued from page 1)

McCain Eligible for

Matching Funds

On July 1, 1999, John McCain

became eligible for public matching

funds for his primary election race

for the Republican nomination for

President. Already, Democrat Bill

Bradley and Republicans Gary L.

Bauer and Dan Quayle have been

certified as being eligible for

matching funds.

To establish eligibility, a candidate must raise $100,000 by collecting $5,000 in matchable

contributions in at least 20 different

states. Only contributions received

from individuals, and only up to

$250 of a contributor’s total, are

matchable by the federal government.

Eligible candidates must agree to

limit their spending, use funds for

campaign-related expenses only,

keep financial records and submit

their records to an FEC audit.

Once declared eligible, candidates can submit additional contributions for matching funds on the

first business day of every month.

The U.S. Treasury will begin paying

out the FEC-certified amounts in

January 2000. Currently, the maximum amount a 2000 Presidential

primary candidate can receive in

matching funds is calculated at

$16.75 million.

Matching fund submissions are

available at the FEC’s Web site —

http://www.fec.gov—as

downloadable FTP files. Go to

“Financial Information About

Candidates, Parties and PACs” and

follow the links. Instructions are on

the Web site.

Copies of submissions are also

available from the FEC’s Public

Records Office. Call 800/424-9530

or 202/694-1120.✦

Preliminary Spending Limits

for 2000 Presidential

Election

The FEC has released preliminary spending limits for publicly

funded Presidential candidates

running in the 2000 election. These

limits are not final. Nevertheless,

campaigns in their formative stages

may wish to use the figures to help

them plan for the future.

• Primary election candidates may

spend up to $39.67 million, $6.61

million of which may only be used

for fundraising expenses;

• General election candidates may

each spend up to $66.12 million on

their campaigns; and

• The two major parties, the Democratic and Republican national

committees, may each spend

$13.25 million in coordinated

expenditures in behalf of their

nominees. See story about convention funding for the two major

parties on p. 3.

Presidential campaigns that

decline federal funding are not

subject to these limits and may

spend unlimited amounts of money

on their campaigns. Note, however,

that these campaigns must adhere to

federal contribution limits.

In addition to the limits described

above, campaign spending for

Presidential primary elections is

restricted by state-by-state limits.

These state limits are calculated by

adding a cost-of-living adjustment

to either the state’s voting age

population multiplied by 16 cents or

to the base limit of $200,000,

whichever is greater. These state

limit estimates, which range from a

low of $661,200 in small-population

states like New Hampshire to a high

of $12.57 million in California, are

available at the FEC’s Web site—

http://www.fec.gov. Copies are also

available from the FEC’s Public

Records Office at 800/424-9530 or

202/694-1120.

Under the public funding program, eligible Presidential primary

candidates receive dollar-for-dollar

federal funds for matchable contributions; only contributions from

individuals, and only up to $250 of a

contributor’s total, are matchable.

Additionally, each major party

nominee in 2000 may accept a

federal grant equal to the general

election spending limit. A nominee

accepting the grant will not be able

to use private contributions to

conduct campaign activity.

The spending limits for nominees

do not apply to certain legal and

accounting costs, for which candidates may spend an unlimited

amount. (Nominees may solicit

private contributions to a special

fund set up to cover these expenses.)

The overall spending limits for

the primary and general elections

were established in 1974, and are

increased each election cycle by a

cost-of-living adjustment. Since the

cost-of-living adjustment and voting

age populations of each state

fluctuate, the actual 2000 spending

limits will not be available until

early next year. Watch for an

announcement in the Record and at

http://www.fec.gov.✦
August 1999 Federal Election Commission RECORD

3

Convention Funding for

Major Parties Certified at

$13.22 Million

On June 29, the Commission

approved convention public funding

for the Democratic and Republican

parties after both met the requirements set out at 26 U.S.C. §9008(g)

and 11 CFR 9008.3(a)(3) and (4).

The 2000 Democratic National

Convention Committee and the

Committee on Arrangements for the

2000 Republican National Convention are each certified to receive

$13.22 million, with an adjusting

amount, based on the 1999 consumer price index, to be certified in

2000. The Democrats will hold their

convention in Los Angeles, and the

Republicans will hold theirs in

Philadelphia.

Federal election law permits

eligible national parties to receive

public funds to pay the official costs

of their Presidential nominating

conventions. Committees accepting

public funding must agree to certain

conditions, including abiding by

spending limits, filing periodic

disclosure reports and undergoing a

detailed FEC audit.

The public funding program,

which also includes funding for the

Presidential primary and general

elections, is financed by the Presidential Election Campaign Fund

Act. The money in this fund comes

from taxpayers who designate $3,

on their federal income tax returns,

for the fund.✦

Regulations

(continued from page 1)

taken in these rules as a narrow

exception to its general practice of

relying on state law to determine

corporate status of any given entity.

Background

LLCs—creations of state law that

have characteristics of both partnerships and corporations—are not

addressed in the Act or previous

Commission regulations. In a series

of advisory opinions, however, the

Commission viewed LLCs as

distinct entities, different from

corporations or partnerships. The

agency determined that LLCs

qualify as “any other organization or

group of persons” under 2 U.S.C.

431(11) and, therefore, were allowed

to contribute up to $1,000 to a

candidate, per election, and $20,000

to a national party committee and

$5,000 to any other political committee per year. See 2 U.S.C.

441a(a). The new rules reject this

view.

For a summary of the Notice of

Proposed Rulemaking (NPRM), see

the January 1999 Record, p. 11. For

the full text of the NPRM, see the

December 18, 1998, Federal Register (63 FR 70065).

Additions to Regulations

The new rules, which move the

Commission from a state-by-state

approach of regulating LLC contributions to a nationwide approach,

are summarized below.

• Section 110.1(g)(1) defines an

LLC as a business entity recognized as an LLC under the laws of

the state in which it was established.

• Section 110.1(g)(2) states that a

contribution from an LLC that

either chooses to be treated as a

partnership under IRS rules, or

makes no choice at all, is considered a partnership contribution.

• Section 110.1(g)(3) states that an

LLC that chooses to be treated as a

corporation under IRS rules, or

that has shares that are traded

publicly, is considered a corporation (and is therefore barred from

making contributions or expenditures in connection with federal

elections).

• Section 110.1(g)(4) states that a

contribution by a single-member

LLC that does not elect corporate

tax treatment will be attributed

only to that member.

• Section 110.1(g)(5) requires an

LLC, when making a contribution,

to tell the recipient committee how

the contribution should be attributed among LLC members and to

affirm that the LLC is eligible to

make the contribution.

Subchapter S Corporations

The original NPRM sought

comments as to whether Subchapter

S corporations should be allowed to

make contributions in federal

elections. Because these corporations are considered corporations

under all states’ laws, this final rule

does not address Subchapter S

corporations. They will, therefore,

continue to be barred from making

contributions in federal elections.

More Information

The full text of the final rules

appears in the Federal Register (64

FR 37397). This document is

available from the FEC’s Public

Disclosure Office and through the

FEC Faxline. Dial 202/501-3413

and request document 236.✦

1 Contributions by a partnership are

subject to the limits contained in 2

U.S.C. §441a(a). In addition, partnership contributions are attributed

proportionately against each contributing partner’s limit for the same

candidate and election. 11 CFR 110.1

The FEC has decided to adopt

this approach with its rules. An LLC

will be treated as a partnership

under the Federal Election Campaign Act (the Act) unless it opts to

be treated as a corporation for tax

purposes.1

 LLCs that choose corporate tax treatment and those that are

publicly traded will be treated as

corporations under the Act. The

Commission views the approach
Federal Election Commission RECORD August 1999

4

Advisory

Opinions

AO 1999-12

Preemption of Pennsylvania

Disclosure Requirements

The Federal Election Campaign

Act (the Act) preempts the application of Pennsylvania’s charitablepurposes disclosure law to

Campaign for Working Families

(CWF) with respect to solicitations

for contributions to its federal

account, provided CWF is raising

funds for its federal account only.

CWF is a multicandidate political

committee with both a federal and a

nonfederal account. It does not

specifically solicit contributions to

the nonfederal account, but states in

solicitations that it deposits funds

that would be impermissible in

federal elections into that account.

Pennsylvania’s Department of

State is attempting to get CWF to

register with it under the Solicitation

of Funds for Charitable Purposes

Act. This state law requires charitable organizations, professional

fundraisers and professional solicitors that solicit in Pennsylvania to

complete extensive registration and

disclosure requirements. The term

charitable organization is defined

broadly to include, among other

things, organizations whose objective is social welfare or advocacy.

Pennsylvania maintains that,

because CWF’s solicitations have a

“social welfare or advocacy objective,” the disclosure requirements

apply to those CWF solicitations

that do not name a specific candidate.

The Act governs CWF’s solicitations because CWF is a registered

political committee and because it

solicits contributions to be used for

the purpose of influencing federal

elections. Consequently, CWF must

comply with the Act’s mandates,

such as regular disclosure of contributions and expenditures and the

use of disclaimers on contribution

solicitations. The Act also states that

its provisions and rules preempt

state laws with respect to federal

elections. 2 U.S.C. §453. Regulations at 11 CFR 108.7 make clear

that federal law supersedes state law

with respect to committee registration and reporting.

Based on this statutory framework and numerous advisory

opinions, the Commission concludes

that the Act preempts application of

the Pennsylvania registration,

reporting and disclaimer provisions

to the federal account and to those

solicitations that seek contributions

to the federal account only. See AO

1986-27. The Act would not,

however, preempt application of the

Pennsylvania law to the nonfederal

account or to the materials mentioned in the advisory opinion

request, which solicit funds for both

the federal and nonfederal accounts.

Specifically, the Act would not

preempt the following provisions of

Pennsylvania’s disclosure law:

• Disclaimer requirements on CWF

solicitations sent to state residents

soliciting donations to the

nonfederal account;

• Registration and reporting requirements applicable to CWF’s

nonfederal account, including

those that might apply to professional fundraising counsels or

professional solicitors raising

funds for the nonfederal account;

or

• Requirements that financial

statements filed by the CWF

nonfederal account include any

amounts spent by the federal

account for the nonfederal portion

of shared federal/nonfederal

fundraising expenses.

Date Issued: June 25, 1999;

Length: 9 pages.✦

AO 1999-13

Use of Corporate Aircraft

The National Republican Congressional Committee (NRCC) may

compensate corporations for aircraft

used by a candidate’s campaign at

the first class rate when the

candidate’s destination is served by

regularly scheduled commercial air

service whether or not the airport is

located within the city limits of the

candidate’s destination. The airport

must, however, be designated in

published sources as serving the

destination city.

Commission regulations permit a

candidate, in connection with a

federal election, to use an airplane

owned or leased by a corporation or

labor organization that is not

licensed to offer commercial

service. The user must pay the

corporation or labor organization in

advance, using the following

guidelines:

• When traveling to a city with

regularly scheduled commercial

airline service, the advance

payment must equal the first class

air fare rate.

• When traveling to a city with no

regularly scheduled commercial

airline service, the advance

payment must equal the usual

charter rate. 11 CFR 114.9(e)(1).

It is reasonable to use published

sources, such as the Federal Aviation Administration’s directory of

public use airports and the charter

industry’s standard reference for

airports, in determining whether a

particular city is served by regularly

scheduled commercial service.

The NRCC described several

locations where this analysis is

relevant, including Cincinnati, Ohio;

Hartford, Connecticut; New Orleans, Louisiana, and Chicago,

Illinois. All qualify as cities with

regularly scheduled commercial

service, even though each city has

more than one airport that serves the

city and not all of those airports are

within the city limits.
August 1999 Federal Election Commission RECORD

5

The Commission notes that the

NRCC’s advance payments to

corporations or unions for candidates’ use of their aircraft would

constitute in-kind contributions

from the NRCC to the various

campaigns.

Date Issued: June 25, 1999;

Length: 4 pages.✦

Advisory Opinion Requests

Advisory opinion requests are

available for review and comment in

the Public Records Office.

AOR 1999-18

Calculation of allocation ratio by

local party committee (San Diego

County Republican Central Committee, June 22, 1999; 2 pages)

AOR 1999-19

Contributions from a living trust

(Andrea Ellis, June 23, 1999; 1

page)

AOR 1999-20

SSF name change and solicitation

of employee life insurance agents

(EQUIPAC, June 25, 1999;

4 pages) ✦

Electronic

Filing

FECFile Classes Set for

August

In an effort to ease the transition

from paper to electronic filing, the

FEC’s Electronic Filing Office is

offering classes in electronic filing

with FECFile 3, the Commission’s

free electronic filing software. The

classes will cover FECFile basics,

data entry requirements for all types

of transactions and procedures for

reviewing and filing reports.

The first class will be held on

August 17 from 9 a.m. to noon at

the FEC’s offices at 999 E St., NW,

in Washington, DC. The class will

be repeated on August 24 and 31 at

the same time and location. To

register, call 202/694-1321 or 800/

424-9530. Space is limited, so

please register as soon as possible.✦

Election

Administration

New Members Named to

Advisory Panel

Four new members have joined

the Office of Election Administration’s 1999 Advisory Panel.

J. Kenneth Blackwell, Ohio

Secretary of State; Gilberto B.

Hoyos, Elections Director for Pinal

County, AZ ; Gary McIntosh,

Director of Elections for Washington; and Lance D. Ward, Secretary

of the Oklahoma State Election

Board were appointed to the panel

by the Commission in June. In

addition, Mexico’s Fernando Franco

returned to the panel to serve with

Canada’s Jean-Pierre Kingsley as

associate members.

The Advisory Panel is comprised

of twenty state and local election

officials from around the country

and two associate members from

Canada and Mexico, whose counsel

helps ensure that the research and

informational needs of all election

officials are best served. These latest

appointments maintain the advisory

panel’s geographic representation

and balance according to jurisdictional size, partisanship and state/

local representation.

The four new panel remembers

replaced John Y. Brown of Kentucky, Brenda Caldwell of Maine,

Lonna Hooks of New Jersey and

Ralph Munro of Washington.

The Commission also renewed

the Advisory Panel’s charter for an

additional two years through July

15, 2001. Under the renewed

charter, the Commission officially

changed the panel’s name from the

Clearinghouse Advisory Panel to the

Election Administration Advisory

Panel. ✦

Impact of National Voter

Registration Act in 1997-98

On June 18, the FEC approved a

report to Congress documenting the

impact of the National Voter

Registration Act (NVRA) during

1997 and 1998, and reiterating three

recommendations to improve the

administration of elections. The

Impact of The National Voter

Registration Act of 1993 on the

Administration of Elections for

Federal Office 1997-1998 covers

the NVRA’s third and fourth years

in effect.

Based on surveys from 43 states

and the District of Columbia, the

report found that between 1994 and

1998 active voter registration in

states covered by the NVRA rose by

3.72 percent, (nearly 7.1 million

people). The report also found that

in 1998, 70.15 percent of the voting

age population (nearly 141 million

people) was registered to vote.

Despite this figure—the highest

since Congressional elections in

1970—the number of people who

(continued on page 6)

Back Issues of the

Record Available on

the Internet

This issue of the Record and all

other issues of the Record starting

with January 1996 are available

through the Internet as PDF files.

Visit the FEC’s World Wide Web

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

click on “What’s New” for this

issue. Click “Help for Candidates,

Parties and PACs” to see back issues. Future Record issues will be

posted on the web as well. You

will need Adobe® Acrobat®

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

a link that will take you to Adobe’s

web site, where you can download

the latest version of the software

for free.
Federal Election Commission RECORD August 1999

6

actually voted in 1998 declined by

more than 2.38 percent over the

same period of time.

Among the highlights in the

report for 1997-98:

• About 35.4 million registration

applications were processed

nationwide, and nearly half, or

17.6 million, of those registrants

represented new registrations to

that particular locality.

• The registration duplication rate

was 6.46 percent.

• Just over 9 million names were

deleted from registration rolls

under the new list verification

procedures in the NVRA, and 14.6

million registrants were declared

inactive and will be removed from

registration lists after 2000 if they

fail to vote in that year’s elections

or do not contact their local

registrar to change their status.

• Mail-in voter registration caused

relatively few problems and

accounted for nearly 25 percent of

all voter registration applications.

• Motor vehicle agencies produced

the highest volume of registration

applications—42.9 percent of total

voter registration applications—

among the various agencies

mandated by the NVRA to offer

this service. Following behind

motor vehicle offices in registration applications were public

assistance agencies (4.37 percent),

state designated agencies (3.09

percent), disability services

agencies (.7 percent) and armed

services recruitment offices (.06

percent).

The report offers recommendations in three broad categories.

Among them, the report:

• Urges states to request only partial

social security numbers from

registration applicants and current

voters;

• Urges states to employ technology

that computerizes all voter registration offices and links them

throughout the respective states;

and

• Urges the U.S. Postal Service to

create a new class of mail with a

reduced postage rate for “official

election material” required for the

NVRA and to provide free space in

postal lobbies for state and local

voter registration materials.

The report is available from the

FEC’s Office of Election Administration by calling 800/424-9530. ✦

Election Administration

(continued from page 5)

Compliance

MUR 4879

Corporate Contributions in

the Names of Others Net

$200,000 Civil Penalty

Beaulieu of America, Inc., has

paid a $200,000 civil penalty for

using corporate funds to reimburse

employees and their spouses for

contributions they made to

Alexander for President (the Committee), Lamar Alexander’s 1996

campaign committee. The civil

penalty is one of the largest civil

penalties paid by a respondent.

Beaulieu CEO Carl M. Bouckaert

served as a national co-chair of the

Committee, and was a co-chair of a

March 1995 fundraiser held in

Dalton, Georgia, where the corporation is based. At the request of

corporate officers, 36 persons,

consisting of Beaulieu employees

and their spouses, made $36,000 in

contributions to the Committee by

purchasing tickets to the fundraiser.

All but two contributors were later

reimbursed with corporate funds by

Beaulieu executives, who disguised

the money as bonuses or expense

reimbursements. The two contributors who did not receive a corporate

reimbursement were reimbursed

with personal funds of two of the

company’s executives.

It is unlawful for a corporation to

make contributions or expenditures

in connection with any federal

election. 2 U.S.C. § 441b(a). It is

also unlawful for any person to

make a contribution in the name of

another or to knowingly permit his

or her name to be used to effect such

a contribution. 2 U.S.C. § 441f.

Beaulieu, which accepted the

responsibility for the actions of its

managers, knowingly and willfully

violated both of these provisions in

the Federal Election Campaign Act.

This matter was referred to the

FEC by the Department of Justice.

Prior to finding probable cause that

violations had occurred, the FEC

entered into a conciliation agreement with Beaulieu.✦

MURS 4797/4798

Prohibited Transfers from

Unregistered Party

Organization to Party

Committees, Failure to

Allocate

Violations of the Federal Election

Campaign Act (the Act) occurred

when an unregistered party organization transferred prohibited funds

to two registered party committees

just prior to election day,

November 3, 1996. Additional

violations included failure to

allocate and failure to accurately

report transfers.

Interparty Transfers

Just prior to the 1996 elections,

the Randolph County Republican

Executive Committee (Randolph

Committee), an unregistered party

organization in North Carolina,

transferred $32,425 to the Sixth

Congressional District (Sixth

District Committee) and $13,925 to

the Buncombe County Republican

Party (Buncombe Committee)—

both registered federal political

(continued on page 8)
August 1999 Federal Election Commission RECORD

7

Date Subject Intended Audience

August 4

9:30 -11 a.m.

Corporate Mergers and

Spin-Offs —Effect on

the SSF

(Code #899)

•

•

Corporate PAC Staff

Lawyers, Accountants

and Consultants to

Corporate PACs

September 1

9:30 -11 a.m.

Fundraising Through

Payroll Deductions

(Code #999)

•

•

Corporate PAC Staff

Lawyers, Accountants

and Consultants to

Corporate PACs

Outreach

Roundtable Schedule

Filled!

Waiting List

Only

FEC Conducts Monthly

Roundtable Sessions

The FEC is conducting monthly

roundtable sessions for the regulated

community at its offices in Washington. The roundtable sessions,

limited to 12 participants per

session, focus on a range of topics.

See the table below for dates and

topics.

Registration is $25 and will be

accepted on a first-come, firstserved basis. Please call the FEC

before registering or sending money

to be sure that openings remain in

the session of your choice. Prepayment is required. The registration

form is available at the FEC’s Web

site—http://www.fec.gov—and

from Faxline, the FEC’s automated

fax system (202/501-3413, request

document 590). For more information, call 800/424-9530 or 202/694-

1100.

Individuals who have signed up

for a roundtable but who will be

unable to attend are strongly encouraged to call the FEC and cancel

their registration so that the next

person on the waiting list may

attend in their place.✦

Regional Conference (includes

candidate, corporate/labor and

party workshops)

Date: September 27-29, 1999

Location: Chicago, IL

(Fairmont Hotel)

Registration: $265

Regional Conference (includes

candidate, corporate/labor and

party workshops)

Date: November 15-17, 1999

Location: San Francisco

(Grand Hyatt)

Registration: To be determined

Candidate Conference

Date: February 2000

Location: Washington, DC

Registration: To be determined

FEC Conference Schedule

 The FEC is sponsoring a series of conferences on campaign finance. See

below for details. To register for any conference, call Sylvester Management

at 800/246-7277 or send an e-mail to tsylvester@worldnet.att.net. For program

information, call the FEC’s Information Division at 800/424-9530 or 202/694-

1100. A regularly updated schedule for the conferences and a downloadable

invitation/registration form appear at the FEC’s Web site. Go to http://

www.fec.gov and click on “Help for Candidates, Parties and PACs” for the

latest information.

Regional Conference (includes

candidate, corporate/labor and

party workshops)

Date: March 2000

Location: Miami, FL

Registration: To be determined

Corporate and Labor

Conference

Date: May 2000

Location: Washington, DC

Registration: To be determined

Membership and Trade

Association Conference

Date: June 2000

Location: Washington, DC

Registration: To be determined

Federal Register

 Federal Register notices are

available from the FEC’s Public

Records Office.

Notice 1999-10

Treatment of Limited Liability

Companies Under the Federal

Election Campaign Act; Final

Rules and Transmittal of

Regulations to Congress (64 FR

37397, July 12, 1999)

Notice 1999-11

Candidate Debates; Extension of

Comment Period (64 FR 39095,

July 21, 1999)
Federal Election Commission RECORD August 1999

8

committees in North Carolina. The

Randolph Committee made the

transfers so that the other two

committees could purchase public

communications. Although most of

the communications appeared to be

designed to supportlocal candidates,

one Buncombe County mailing had

a federal component The Randolph

Committee asked the Sixth District

Committee and Buncombe Committee to pay for the mailings because it

wanted to avoid questions that

would be raised by being identified

as the sponsor of the communications.

The Act requires a state or local

party organization that finances

activity in connection with both

federal and nonfederal elections to

either establish a separate federal

account (from which all disbursements in connection with federal

elections are made) or establish one

political committee that receives

only contributions that are permissible under the Act, regardless of

whether the funds are used in

connection with federal or

nonfederal elections. 11 C.F.R.

§102.5(a)(1). Federal committees

and federal accounts may not accept

any funds that exceed the federal

contribution limits. 11 CFR

102.5(a). In this case, the Sixth

District Committee maintained only

one account—a federal account—

and, at the time of the transfers at

issue in 1996, the Buncombe

Committee also only maintained a

federal account.

The Act also states that an

organization that does not qualify as

a federal political committee, but

wants to influence federal elections,

must either establish a federal

account that receives only funds

subject to the limitations of the Act

or be able to demonstrate through a

reasonable accounting method that it

has sufficient funds permissible

under federal law to cover the

amount of the federal disbursement

at the time the contribution is made.

11 C.F.R. §102.5(b)(1). In this case,

the Randolph Committee had done

neither. Moreover, the Randolph

Committee did accept donations

that, while being legal under North

Carolina law, exceeded the limits of

the Act.

The Randolph Committee

violated 2 U.S.C. § 441a and 11

C.F.R. §102.5(a) by transferring

impermissible funds to the federal

accounts of the Sixth District

Committee and the Buncombe

Committee. Those two political

committees, in turn, violated 2

U.S.C. § 441a(f) and 11 C.F.R.

§102.5(a) by accepting impermissible funds into their federal accounts from an unregistered

committee.

Allocation & Misreporting

Party committees that maintain

separate federal and nonfederal

accounts are required to allocate

their disbursements between the two

accounts. 11 CFR 106.5(a). The

Buncombe Committee maintained

both federal and nonfederal accounts from July of 1997 through

January of 1998. However, the

Buncombe Committee did not

allocate any of the disbursements

made during the period during

which it maintained the two accounts.

The Buncombe Committee also

misreported the dates and amounts

of transfers in violation of 2 U.S.C.

§ 434(b).

The Commission entered into

conciliation agreements with the

three committees prior to a finding

of probable cause to believe that

they had violated the Act and

Commission regulations. Each

committee agreed to pay a $6,000

civil penalty. ✦

Compliance

(continued from page 6) 800 Line

Testing the Waters

Before deciding to campaign for

federal office, an individual may

“test the waters,” or explore the

feasibility of becoming a candidate.

Testing-the-waters activity does not

trigger candidate registration even if

the individual raises or spends more

than $5,000 (the dollar threshold

that would normally trigger registration and reporting). Nevertheless,

funds raised to test the waters are

subject to the Act’s limitations and

prohibitions.

Once an individual begins to

campaign or decides to become a

candidate, funds that were raised or

spent to test the waters apply to the

$5,000 threshold for qualifying as a

candidate. Once that threshold is

exceeded, the individual must

register with the FEC (candidates

for the House of Representatives) or

the Secretary of the Senate (candidates for the Senate), and begin to

file reports.

Testing the Waters vs.

Campaigning

Testing the Waters. Examples of

testing-the-waters activities include

polling, travel and telephone calls to

determine whether the individual

should become a candidate. 11 CFR

100.7(b)(1) and 100.8(b)(1).

Campaigning. Examples of

campaigning include situations

where individuals:

• Make or authorize statements that

refer to themselves as candidates

(“Smith in 2000” or “Smith for

Senate”);

• Use general public political

advertising to publicize their

intention to campaign;

• Raise more money than what is

reasonably needed to test the

waters or amass funds (seed

money) to be used after candidacy

is established;
August 1999 Federal Election Commission RECORD

9

Close of Books Certified/

Registered

Mail Date

Filing Date

Pre-General

Post-General

September 1

October 11

September 7

October 21

September 9

October 21

Close of Books Certified/

Registered

Mail Date

Filing Date

Pre-General

Pre-Runoff

Post Runoff

September 1

October 27

December 6

September 7

November 1

December 16

September 9

November 4

December 16

Close of Books Certified/

Registered

Mail Date

Filing Date

Pre-General

Mid-Year

September 1

December 31

September 7

January 31

September 9

January 31

Close of Books Certified/

Registered

Mail Date

Filing Date

Pre-Runoff

Post-Runoff

October 27

December 6

November 1

December 16

November 4

December 16

1

These committees include authorized committees of candidates running in

the election and other political committees that support these candidates and

do not file monthly.

California Special General Election Reporting

Committees1 involved in the September 21 special general election and/or

the November 16 special runoff election to fill the 42nd Congressional

District seat that was held by the late Congressman George E. Brown, Jr.

must follow the reporting schedules below. Note that 48-hour notices are

required of authorized committees that receive contributions (including

loans) of $1,000 or more between September 2 and September 18 in the

special general election and between October 28 and November 13 in the

special runoff election (if the runoff is required).

For Committees Involved Only in Special General When No Runoff is

Held:

For Committees Involved in Special General And Special Runoff:

For Committees Involved Only in Special General When Both Special

General And Runoff Elections Are Held:

• Conduct activities over a protracted period of time or shortly

before the election; or

• Take action to qualify for the

ballot. 11 CFR 100.7(b)(1) and

100.8(b)(1).

Contribution Limits and

Prohibitions

Limits. Contribution limits apply

to all the support given to an

individual who is testing the waters.

The limits apply, for example, to:

• Gifts of money, goods and services;

• Loans (except bank loans);

• Certain staff advances until repaid;

• Endorsements and guarantees of

bank loans; and

• Funds given or personally loaned

to the individual to pay for his or

her living expenses during the

testing-the-waters period. 11 CFR

100.7(a)(1).

Prohibitions. An individual who

is testing the waters may not accept

money from:

• Labor organizations (although

funds from a labor separate

segregated fund—also called a

PAC—are permissible);

• Corporations, including nonprofit

corporations (although funds from

a corporate separate segregated

fund—also called a PAC—are

permissible);

• Foreign nationals; or

• Federal government contractors.

Recordkeeping and Accounting

Recordkeeping. An individual

who tests the waters must keep

financial records of the name of

contributors, the date of receipt and

amount of contributions, and all

expenditures made. If he or she later

becomes a candidate, the money

raised and spent to test the waters

must be reported by the campaign as

contributions and expenditures. 11

CFR 101.3.

(continued on page 10)

For Committees Involved Only in the Special Runoff:
Federal Election Commission RECORD August 1999

10

Separate Bank Account. Although this is not a requirement, an

individual who tests the waters may

want to consider segregating testingthe-waters funds from personal

funds by setting up a separate bank

account for the deposit of receipts

and the payment of expenses. If the

individual later becomes a candidate, a campaign account must be

established to keep campaign funds

separate from anyone’s personal

funds. 11 CFR 102.10, 102.15,

103.2 and 103.3(a).

Organizing a Testing-the-Waters

Committee

An individual may organize an

“exploratory committee” or “testing-the-waters committee” for

exploring the feasibility of becoming a candidate. Such a committee

is not considered a political committee and does not have to register or

file reports as long as its activities

are limited to testing the waters and

it does not engage in campaigning.

The name of the committee, and

statements by committee staff, must

not refer to the individual as a

candidate. For example, an exploratory committee could not be called

“Sam Jones for the House,” which

would indicate that Jones had

already decided to run for federal

office. Instead, the committee could

be called “Sam Jones Congressional

Exploratory Committee.”

If the potential candidate decides

to run for federal office and becomes a candidate under the Act,

then he or she may designate the

exploratory committee as the

principal campaign committee.

Becoming a Candidate

Once an individual decides to

become a candidate for federal

office, the funds raised during the

testing-the-waters phase automatically become contributions, and the

funds spent, including polling costs,

become expenditures. These

800 Line

(continued from page 9)

contributions and expenditures

count toward the threshold that

triggers candidate status. Once the

contributions or expenditures

exceed $5,000, the individual

becomes a candidate and must

register under the Act. The money

raised and spent for testing the

waters must be disclosed on the first

report that the principal campaign

committee files.

If an individual decides not to run

for federal office, there is no

obligation to report these finances,

and the donations made to the

testing-the-waters committee will

not count as contributions.✦

Information

Guidelines Modified for

Presidential, Vice

Presidential Candidates

Filing Personal Disclosure

Statements

On July 2, the Commission

approved several modifications to

Directive 21, which outlines procedures that implement the FEC’s

duties and responsibilities under the

Ethics in Government Act with

respect to candidates for federal

office.

The FEC’s general responsibility

under the Ethics Act is to receive

filings from Presidential and Vice

Presidential candidates (incumbent

President, Vice President and

Members of Congress excluded) and

forward copies of their filings to the

Office of Government Ethics.

Directive 21, among other things,

requires the FEC to notify Presidential and Vice Presidential candidates

of their obligation to file personal

financial disclosure forms and to

follow up those notifications with

additional requests if the candidates

do not comply or do not accurately

fill out the forms.

1

 The Act defines a candidate as an

individual who has received contributions or made expenditures aggregating

in excess of $5,000, or who has given

consent to another to receive contributions and make expenditures on his or

her behalf and the financial activity has

exceeded $5,000.

The changes came after a review

of Directive 21 in light of some

1996 Presidential and Vice Presidential candidates who failed to file

personal financial disclosure forms

or filed incomplete forms. The

changes, recommended in conjunction with the Office of Government

Ethics, are intended to promote

higher compliance with the filing

requirements.

• The initial notification letter

informing candidates of their

personal financial disclosure filing

obligation currently advises them

to file the form—SF 278—within

30 days of becoming a candidate

as defined by the Federal Election

Campaign Act (Act). This letter

has been revised to include the

definition of candidate found at 2

U.S.C. §431(2).1

• A follow-up letter to candidates

who fail to file the SF 278 or file

an incomplete form has been

revised to state that candidates

who fail to file within 30 days may

request that the $200 filing fee be

waived. The revised letter also

now warns late filers that they may

be referred to the Department of

Justice for civil action.

• The FEC also will now provide

additional information to the

Office of Government Ethics

regarding the type of delinquent

report (i.e., initial or subsequent

annual).

• The Data Systems Development

Division will send the General

Counsel’s Office a list of all

candidates on a weekly basis and

will continue to send the list to the

Public Records Office on a weekly

(election year) or monthly

(nonelection year) basis.
August 1999 Federal Election Commission RECORD

11

So far in the 2000 Presidential

election cycle, only one of the 20

Presidential candidates notified of

the filing requirement has failed to

file the personal financial statement.

Nevertheless, since more than 100

Presidential candidates have filed a

Statement of Candidacy and/or a

Statement of Organization, the

agency anticipates it might be

required to send notification letters

to additional candidates during 1999

and 2000.✦

Index

The first number in each citation

refers to the “number” (month) of

the 1999 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

1998-22: Application of expenditure

definition and disclaimer requirements to web site containing

express advocacy, 1:16

1998-23: Status as state committee

of political party, 1:16

1998-26: Candidate committee’s

acceptance of loan repayment

from contested election trust fund

that contains funds loaned to it by

candidate, 3:5

1998-27: Status as state committee

of political party, 3:6

1999-1: Use of campaign funds to

pay salary to candidate, 4:5; 6:6

1999-2: Use of corporate treasury

funds to provide meals to employees attending candidate forums,

4:6

1999-3: Use of digital signatures by

restricted class to authorize

payroll deductions, 5:5

1999-4: Applicability of contribution limits to local party organization conducting federal activity

and affiliated with state party

committee, 6:3

1999-5: Revising state party ballot

composition ratio for new executive office, 6:4

1999-6: Use and publication of

information about annuity allotment program permitting union

member retirees to make contributions to SSF, 6:4

1999-7: Free hyperlinks on government web site to web sites of

candidates, 6:5

1999-8: Investment of excess campaign funds in mutual funds, 6:6

1999-9: Matching credit card

contributions received by Presidential primary candidates via

Internet, 7:5

1999-10: SSF solicitation of member policyholders of mutual

insurance company, 7:7

1999-11: Federal candidate’s use of

funds from state-level account, 7:7

1999-12: Preemption of Pennsylvania disclosure requirements 8:4

1999-13: Use of Corporate Aircraft,

8:4

Compliance

MUR 4546: Failure to provide

contributor information and

demonstrate “best efforts,” 5:8

MUR 4632: Untimely reports;

failure to amend Statement of

Organization; treasurer’s absence,

7:10

MUR 4750: Excessive contributions, 1:13

MUR 4751: Excessive and improper

transfers of nonfederal funds,

excessive contributions, corporate

contributions, 2:2

MUR 4796: Corporate contributions, contributions in the names

of others, 1:13

MUR 4797/4798: Prohibited

Transfers from unregistered party

organization to party committees,

failure to allocate, 8:6

MUR 4834: Foreign national

contribution, contribution in the

name of another, 3:7

MUR 4879: Corporate contributions

in the names of others, 8:6

Court Cases

FEC v. _____

– Al Salvi for Senate Committee

(98C-4933), 4:5

– Colorado Republican Federal

Campaign Committee, 4:1

– David Gentry for Congress

Committee, 7:10

– Forbes, 4:5

_____ v. FEC

– Judd, 1:3; 4:5

– Judicial Watch, 7:8

– Mariani, 2:1

– National Committee of the Reform

Party, 4:4

– Perot ’96 (98-1022), 6:1

– RNC (98-5263), 1:2

Other

– Burris v. Russell, 1:3

– Cincinnati v. Kruse, 1:3

– Fireman v. United States, 5:7

– USA v. Hsia, 7:9

Regulations

Debates, 7:5

Definition of “Member” of Membership Association, 1:10; 3:1; 5:6

Electronic FOIA, 4:7

Express Advocacy, 3:2; 6:7

Limited Liability Companies, 1:11;

8:1

Matching Credit Card and Debit

Card Contributions in Presidential

Campaigns, 7:4

Public Financing of Presidential

Primary and General Election

Candidates, 1:7; 3:1; 5:6

Soft money, 1:12

Status of, 3:3

Reports

Electronic filing, 1:6; 2:1

Reports due in 1999, 1:4

Reports due in July, 7:1

Special election, California, 8:9

Special election, Georgia, 2:3

Special election, Louisiana, 4:7

Statistics

Congressional, 2:4; 6:8

PAC, 3:11; 7:2

Party, 3:4; 6:8
FEDERAL ELECTION COMMISSION

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Washington, DC 20463

Official Business

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Bulk Rate Mail

Postage and Fees Paid

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Printed on recycled paper

Federal Election Commission RECORD August 1999

Electronic Filing Survey

REMINDER! If you have not done so already, please fill out and return the FEC Electronic Filing survey. This will help

us improve the services we provide to the filing community. If you have misplaced the survey or did not receive it,

download it from the FEC web site electronic filing page, http://www.fec.gov/elecfil/New/electron.htm (or follow the

links to “Electronic Filing at the FEC” on www.fec.gov) and click on “SURVEY.” If you do not have access to the web

site, call 202/694-1321 or 800/424-9530 and press 1.