FEDERAL ELECTION COMMISSION

20463 Volume 15, Number 

future receipts of contributions or intere

The committee would have to deposit su

assets in a separate "collateral account" u

to retire the debt. Furthermore, publi

funded candidates would be required to 

thorize the Secretary of the Treasury 

directly deposit public funds used as coll

eral into this account. Finally, loans co

not exceed the amount reasonably expec

in future receipts.

3. In the absence of either tradi tional or n

traditional collateral, a candidate or comm

tee would have to demonstrate that the un

cured loan was made on some other basis t

assured repayment. Without this eviden

the Commission would presume that the l

was not made on a basis that assured rep

ment.

Disclosure of Loans

In addition to these proposed rules, the Co

mission proposes a supplement to Schedules C 

C-p (to be filed the first time a loan is report

in order to improve the monitoring and disclos

continu

TABLE OF CONTENTS

REGULATIONS

1 Loans to Candidates from Lending

Institutions: NPRM

2 Affiliation and Earmarking Rules Revised

2 ADVISORY OPINIONS

CLEARINGHOUSE

4 Voting System Standards Proposed

SPECIAL ELECTIONS

4 Texas Runoff Reporting Schedule

5 AUDITS: Gore Committee

6 COMPLIANCE: MUR 2594

COURT CASES

7 Common Cause v, FEe

8 FEC v. Californians for a Strong America

8 FEC v, Bob Richards for President

8 Miller v; FEe

8 FEC v, Franklin

9 New Litigation

800 LINE

10 Names of Corporate and Labor PACs

11 INDEX

999 E Street NW Washington DC

FEC SPECIALISTS TO VISIT ATLANTA

Campaign workers, PAC workers, candidates and all others in the Atlanta. Georgia,

area who are interested in campaign finance

will have an opportunity in September to

meet personally with public affairs specialists from the Federal Election Commission.

Dorothy Hutcheon and Ian Stirton, specialists trained to answer questions in most

areas of federal election law and FEC regulations, will be in Atlanta September 20-21.

On these days, Ms. Hutcheon and Mr. Stirton

plan to hold informal meetings to discuss

registration, reporting, recordkeeping, the

rules on contributions and expenditures and

other aspects of the election law and FEC

policy.

Anyone wishing to schedule a meeting

with the specialists should contact Ms.

Hutcheon or Mr. Stirton at the FEC. Call

800/424-9530 or 202/376-3120.

LOANS TO CANDIDATES

FROM LENDING INSTrrUTIONS:

NOTICE OF PROPOSED RULEMAKING

On July 27, 1989, the Commission published a

Notice of Proposed Rulemaking in the Federal

Register seeking comments on proposed changes

in the rules on loans from lending institutions to

oandidates and political committees (11 CFR

Parts 100, 9004 and 9034). See 54 Fed. Reg.

31286. A public hearing is scheduled for October

4, 1989.

Assuring Repayment

The notice requests comments on three proposed methods of satisfying the statutory requirement that loans be made on a basis which assures

repayment. 2 U.S.C. §43l(8)(B)(vii)(II)~ The three

alternative methods are:

1. A candidate or political committee could

secure a bank loan with some form of traditional collateral, such as real estate, personal

assets, etc.

2. A candidate or committee could, alternatively, pledge such nontraditional forms of

collateral as future receipts of public funds

(in the case of Presidential candidates) or

September 1989

.e
September 1989 FEDERAL ELECTION COMMISSION Volume 15, Numb

ADVISORY OPINION REQUESTS

The following chart lists recent requests 

advisory opinions (AORs). The full text of 

AOR is available to the public from the F

Public Records Office.

o The factors used to avaluate whether com

tees are commonly established, financed, m

tained or controlled, and therefore affil

(11 CFR 110.3(8)(3));

o Transfers of funds between previous and 

rent federal campaign committees of the 

candidate (11 CFR 110.3(c)(4»)j

o Transfers of funds between principal camp

committees of a candidate who is concurr

seeking more than one office (11 CFR 110

(5»;

o New language defining the term "condu

intermediary" (11 CPR 110.6(b)(2»; and

o Reporting of earmarked contributions by 

the recipient candidate committee. and 

conduit or intermediary (11 CFR 110.6(c».

The Commission also clarified the 

governing:

o Prohibited contributions (II CFR 110.4); an

o The annual contribution limitation for 

viduals (11 CFR 110.5).

A detailed sum mary of the changes wil

pear in next month's Record.

Contributions to special elec

nominee not running in primary ru

election (Date made public: July 

1989; Length: 4 pages)

Subject

Restaurant's method of billing 

tical committees using its facil

for fundraising. (Date made pu

JUly 13, 1989; Length: 4 pages)

AOR

1989-14

1989-15

Other Issues

The Commission also welcomes comments on

several other related issues, including:

o The practicality of analogizing political loans

to loans a bank makes to its officers or boards

of directors-so-called "insider" loans, which

are governed by 12 CFR 215.4(b)(1)-{2)t 563.43

(b)O)-(2) and 337.3(b);

o Whether additional documentation should be

submitted to assist the Commission in monitoring compliance, such as loan agreements, security agreements or financial plans;

o Whether there should be guidelines or limits on

total loans outstanding to a committee at any

given time;

o Whether the proposed rules are applicable to

lines of credit granted by lending institutions to

candidates and committees;

o Whether loans made shortly before an election

should be reported immediately, similar to the

requirements of 11 CPR 104.5(f); and

o Whether to require that loans include a due

date at or near the election.

Persons wishing to submit comments or requests to appear at the October 4 public hearing

should address them to Ms. Susan Propper, Assistant General Counsel, 999 E Street, NW, Washington, DC 20463. All comments and requests must

be received by September 15, 1989.

of loans from lending insti tutions. Draft forms

have been included in the Federal Register notice

so that the public may comment on them.

In addition to requiring loan information provided by the borrowing committee, the proposed

form includes a section for the lender to confirm

that the loan has been made according to standard

practice.

AFFn.IATION AND EARMARKING

REGULATIONS REVISED

On August la, 1989, the Commission approved final revisions to the rules governing affiliation and earmarking. The Commission will

promulgate the rules, which were. published in the

Federal Register on August 17, 1989 (54 Fed.

Reg. 34098) after they have been before Congress

for 30 legislative days. The principal areas

affected by the changes (with cites to revised

rules) are:

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

D.C. 20463. Commissioners are: Danny L. McDonald, Chairman; Lee Ann Elliott, Vice Chairman;

Joan Aikens; Thomas J~ Josefiak; John Warren McGarry; Scott E. Thomas; Walter J. Stewart,

Secretary of the Senate, Ex officio; Donnald K. Anderson, Clerk of the House of Representatives,

Ex Officio. For more information, call 202/376-3120 or toll-free 800/424-9530. (TDD For Hearing

Impaired 202/376-3136) .

2
September 1989 FEDERAL ELECTION COMMISSION

ALTERNATE DISPOSITION OF

ADVISORYOPINION REQUESTS

AOR 1989-11: Sponsorship of Nonconnected PAC

by Members of a Partnership That

Is a Government Contractor

On August 10, 1989, the Associate General Counsel sent the requesters a letter informing them

that the Commission was unable to approve a

draft advisory opinion by the required four votes.

ADVISORY OPINION SUMMARms

AO 1989-10: Candidate Committee's Financial

Situation after Embezzlement

by Former Treasurer

Senator Dennis DeConcini, who has established a

committee for a 1994 reelection campaign, anticipates that his 1988 campaign will have debts

resulting from an alleged misappropriation of

about $500,000 by the committee's former treasurer. Should an auditor hired by the committee

find that the 1988 committee's funds were depleted as a result of the embezzlement, the

committee may:

o Accept a personal loan from the Senator to

retire its debts;

o Report costs of the audit as a debt of the 1988

campaign;

o Use funds transferred from the 1994 committee

to pay the debts of the 1988 committee; and

o Raise funds for the 1988 campaign to cover its

debts, but not to replace the embezzled funds.

Candidate's Personal Loan. The Senator may

lend money from his personal funds to the campaign to help it extinguish its outstanding debts.

Such a loan would be reportable as a debt owed by

the 1988 committee to the Senator.

A loan from the candidate to his authorized

committee, like any other debt, must be continuously reported on FEC Form 3 until extinguished.

2 U.S.C. S434(b)(8); 11 CFR 104.3(d) and 104.11.

Transfer of Funds. Payments owed to the

auditor hired by the 1988 campaign are reportable

as debts owed by that committee; they can be extinguished, however, with funds transferred from

the 1994 campaign. FEC regulations permit unlimited transfers between a candidate's previous

and current campaign committees, subject to certain rules. 11 CFR 110.3(a)(2)(iv).

Fundraising. The committee may also raise

funds to cover any debts !rom the 1988 campaign,

as long as the funds raised do not exceed the

debts. (Alternatively, the Senator's 1994 campaign committee may pay the debts of the 1988

campaign.) Contributions solicited and accepted

for this purpose must be designated by the donors

as contributions for the 1988 general election and

must be aggregated with any contributions previously made by the same donors to the Senator's

3

Volume 15, Number

1988 general election campaign. 11 CFR 110

(b)(3), 110.I{g) and 1l0.2(b)(3). See also AO 198

2. Furthermore, the 1988 committee may n

accept more than the "adjusted amount of n

debts outstanding on the date the contribution 

received," even if the amount embezzled exceed

the "net debts outstanding." 11 CFR llO.l(b)(

(iii).

Reporting. The committee must report th

amount embezzled as an "Other Disbursement" o

line 21 of Form 3 and should explain the entry o

Schedule B, giving the name of the former trea

urer, the amount misappropriated, the date and 

brief description of the circumstances. (Da

issued: JUly 21, 1989; Length: 5 pages)

AO 1989-12: Act's Preemption of State Law

Governing Contributions

The Federal Election Campaign Act (FECA) pr

empts an Indiana statute governing contributio

to statewide candidates to the extent that the la

affects contributions to federal candidates.

Section 4-3-30-19 of the Indiana Code, adde

by the recently passed Indiana House Enrolled A

1409, affects contributions to federal candidat

in two ways:

1. It forbids a person who enters into a contra

as a "vendor" with the Indiana State Lotte

Commission to make a contribution to 

"candidate for statewide elected offic

during the three years following the la

award or renewal of the contract.

2. It prohibits the Lottery Commission and i

director from entering into contracts f

goods or services with persons who hav

made contributions to candidates f

"statewide elected office" within the thre

years preceding the award of the contract.

Only contributions made after" March 15 198

ar~ subject to ,the Indiana Act, which pr~scrib

crirnlnal penalties for violators.

The FEC concludes that section 19 was i

tended, t? prohibit co~tractors with the Lotter

Commission from making contributions to cand

dates for the U.S. Senate, since no Indiana statu

or regulation excludes federal candidates fro

the definition of "candidate for statewide electe

office." The federal election law, however, state

that the provisions of the FECA "supersede an

preempt any provision of State law with respe

to election to Federal office." 2 U.S.C. §45

Because the FECA alone occupies the field wi

respect to contributions for federal elections, 

preempts section 19's prohibition again

~o~t~ibutions to statewide federal candidates b

individuals who have entered into contracts wi

the Lottery Commission.

Furthermore, section 19's second prohibitio

stated above, is also preempted by the FECA

continue
TEXAS 12th DISTRICT SPECIAL ELECTION

REPORTING DATES

Fil

Da

8/3

10

1/3

8/28

10/12

1/31

Reg.!

CerL

Mailing··

Date

Volume 15, Numb

Period

Covered·

7/24-8/23

8/24-10/2

10/3-12/31

Report

Pre-Runoff

Post-Runoff

Year-End

The Commission will publish final stan

at a later date, after reviewing the comm

received on the proposed standards and comp

plans. Anyone wishing to review the proposa

to comment upon them, should contact 

Penelope Bonsall, Director, National Clea

house on Election Administration, Federal 

tion Commission, Washington, DC 20463. 

phone 202/376-5670 or 800/424-9530. 

comments must be received by Septemb

1989.

TEXAS SPECIAL ELECTION

REPORTING UPDATE

A special runoff election has been sche

on September 12, 1989, to fill the 12th Con

sional District seat vacated by the resignati

House Speaker Jim 'Wright. Candidates el

for the runoff were selected in an Augu

special election. All com mittees participat

the September 12 election should follow 

schedule below.

Candidates, PACs and party committee

volved in the special runoff should refer to 

August Record for details on reporting req

ments (Including reporting of independent ex

itures and last-minute contributions). Co

the Information Services Division of the FE

further information; call 800/424-9530 

202/376-3120.

"'The period begins with the close of boo

the last report filed by the committee. If 

committee has filed no previous reports, the 

Cod begins with the date of the committee's 

actiVity.

'"'"Reports sent by registered or certified 

must be postmarked by the mailing date. O

Wise, they must be received by the filing date

September 1989 FEDERAL ELECTION COMMISSION

COMMISSION PUBLISHES PROPOSED

VOTING SYSTEM STANDARDS

In August the Commission published a notice

in the Federal Register requesting comments on

proposed voluntary standards for computerized

voting systems (e.g., Punchcard, Marksense and

Direct Recording systems). See 54 Fed. Reg.

32479. Comments are also sought on three

related plans:

o A plan for implementing the standards;

o The system escrow plan; and

o A process for evaluating independent test authorities.

The standards were developed to provide

state and local voting jurisdictions, as well as

vendors of voting systems software, with guidelines to ensure the accuracy and reliability of the

various computerized ballot tabulation systems in

use throughout the country. The standards do not

apply to noncomputerized systems, and they do

not incorporate specifications for mainframe

computer hardware.

The restriction on the Lottery Commission's

contracting authority effectively penalizes

vendors who contribute to candidates for

statewide federal office. Because this provision

inherently restricts the federal political activity

of vendors wishing to do business with the Lottery

Commission, it has the same effect as the part of

section 19 that precludes contractors from

making contributions. (Date issued: July 31,

1989; Length: 5 pages)

COMMISSIONERS ISSUE DISSENTS TO

ADVISORY OPINIONS.

In recent weeks, FEe Chairman Danny L.

McDonald and Commissioner John W. McGarry

issued dissents to advisory opinions approved by

the Commission earlier this year.

On July 20, Chairman McDonald filed dissenting opinions to two advisory opinions issued by

the Commission on June 30. Advisory Opinions

1989-7 and 1989-9 permitted two corporations to

use general treasury funds to match their employees' PAC contributions with donations to charity.

The two opinions were summarized in the August

Record. .

On July 25, Chairman McDonald and Commissioner McGarry issued a joint dissent to the

Commission's reconsideration of AO 1987-31, concerning the solicitability of different classes of

members of a commodities exchange. The reconsideration was summarized in the April Record.

4
September 1989 FEDERAL ELECTION COMMISSION Volume 15, Number 

FINAL AUDIT REPORT ON

GORE CAMPAIGN RELEASED

On July 13, 1989, the Commission approved

the final audit report on the Albert Gore, Jr. for

President Committee, Senator Gore's principal

campaign committee for the 1988 Presidential

primary elections. The results of the audit are

described below.

Disclosure of Reattributed Contributions

The audit of the Gore committee's finances

revealed that several contributions reattributed

to donors' spouses were not itemized correctly.

For example, the committee received a $1,000

check (drawn on a joint account) from an individual on February, 1 and reported the contribution as received on that date from the person who

signed the check. Subsequently, the committee

sent the donor a letter requesting [nformation

needed to reattribute half of the money to the

donor's spouse. The committee received the information in March, but recorded the reattributed

contribution as having been received on the date

of the original contribution (February 1), rather

than on the date it was reattributed to the spouse.

Moreover, the reattribution was not included in

the monthly report covering Mw'ch or in any

subsequent report.

Prior to the completion of the final audit

report, the Gore committee corrected the problem by filing amended reports with the Commission disclosing accurate information on the 'reattributed contributions. The Commission took no

further action with respect to this matter.

Transfer of Funds

In December 1987 Friends of Albert Gore

Jr., the candidate's authorized campaign commit:

tee for the 1990 Senate elections, transferred

$24,000 to the candidate's Presidential committee. The funds had been contributed by individuals and political committees and had been

designated for the 1990 Senate election.

Commission regulations permit unlimited

transfers between the principal campaign committees of a candidate seeking nomination to

more than one federal office, as long as:

1. The candidate is "not actively seeking" nomination for more than one office;

2. The transfer does not cause contributors to

exceed their contribution limits; and

3. The candidate has not chosen to receive

public matching funds under Title 26.

The audit concluded that the transfer between Senator Gore's Senate and Presidential

5

campaigns was not permissible under 2 U.S.

§441a(a)(5)( C) and 11 CFR 1l0.3(a)(2)(v). Becau

the Senator was a registered candidate "active

seeking election" in both the 1990 Senate electi

and the 1988 Presidential election, and had be

certified under 11 CFR 9036 to receive matchi

payments for the 1988 Presidential primaries 

the time of the transfer, the Commission cons

ered the transfer of funds to be impermissib

While the Presidential committee disagreed w

this finding, it transferred the $24,000 back to t

Senate committee prior to the issuance of t

final audit report.

Stale-Dated Checks

The Gore audi t revealed 21 outstanding sta

dated checks--Le., committee checks that h

never been cashed by the payees-totali

$2,490.05.

According to the FECls regulations, a co

mittee receiving public funds under the matchi

payment program must notify the Commission 

any checks outstanding to creditors or contrib

tors that have not been cashed. The committ

must also inform the FEe of any efforts made 

locate the payees and to encourage them to ca

the checks. Finally, the committee must repay 

the U.S. Treasury an amount equal to the total 

the stale-dated checks. 11 CFR 9038.6.

In response to the audit findings. the comm

tee prepared a schedule listing the results of 

efforts to have the stale-dated checks cashed, a

it repaid $292.00, the amount which the comm

tee believed would remain uncashed, The Co

mission made an initial determination that $2

was repayable to Treasury and accepted Comm

tee repayment of this amount.

Nonqualified Campaign Expenses

The audit showed that the Gore committ

appeared to have incurred $13,330.38 in expen

related to the Democratic convention. Sin

these expenses were incurred after Senator Gor

date of ineligibility and did not relate to windin

down activities. they were considered nonqua

fied campaign expenses.

The Presidential public funding law requir

that money received by a committee as matchi

payments be used only to cover "qualified ca

paign expenses." as defined in 26 U.S.C. §9032

(A). Disbursements for nonqualified expenses m

be made, without incurring a repayment oblig

tion. only after all matching funds have be

spent.

In this case, the Commission determined th

the nonqualified expenses for the convention w

incurred before the Gore campaign had liquida

all of its matching funds. The Commission ma

an initial determination that the committee h

to repay $4,035.41, representing that portion 

the nonqualified expenses defrayed with pub

funds.
September 1989 FEDERAL ELECTION COMMISSION Volume 15, Numb

The committee disagreed with this finding

because it had paid the convention expenses from

an account that was separate from the one

containing matching funds. However, under FEC

regulations, all accounts of one committee are

viewed as a single account for the purpose of

determining whether nonqualified campaign expenses have been made. 11 CFR 9038.2(b)(2)(iii).

Moreover, the committee had used the separate

account to make transactions related to the

campaign. The committee made a repayment of

$4,035.41 prior to the release of the final audit

report.

Copies of the final report on the Gore audit

can be obtained from the FEC's Public Records

Office.

MUR 2594: Contributions from Party Senatorial

Committee to House Candidates and

from Congressional Committee to

Senate Candidates

This MUR, initiated by a referral from the FECls

Reports Analysis Division, concerned the making

of allegedly excessive contributions by a major

party's Senatorial campaign committee to candidates running for the House of Representatives

and by the party's Congressional campaign

committee to candidates running for the Senate.

The Commission found fino reason to believe" that

a violation had occurred.

Background

Disclosure reports filed by the major party's

national committee and Senatorial campaign committee revealed that, during the 1988 elections,

the Senatorial committee had made contributions

totaling $214,500 to 29 House candidates. These

contributions were in addition to those made to

the same candidates by the party's Congressional

campaign committee and the national committee.

Similarly, FEC reports indicated that the Congressional committee had contributed $51,929 to

Senate candidates, over and above the contributions made by the Senatorial and national committees to these same Senate candidates. At

issue were two questions:

I. Can the Senatorial committee contribute up

to $5,000 to a House candidate, and is this

limit separate from those of the national and

Congressional campaign committees?

2. Does the Congressional campaign committee

have a separate $5,000 limit on contributions

to Senate candidates, in addition to the

combined $17,500 limit shared by the

national and Senatorial committees?

6

General Counsel's Report

Under the election law, the na

committee and the Congressional committee 

political party are considered separate fo

purposes of making contributions. 11 

llO.3(b)(2)(i). In elections for the U.S. Se

however, a party's national committee 

Senatorial committee share a special com

contribution limit of $17,500 per Senate cand

for the entire election cycle. 2 U.S.C. §44la

The Act and Commission regulations ar

lent about whether a Senatorial campaign 

mittee of a political party may contribu

House candidates in amounts that would ex

the respective limits of the Congressiona

national committees. Similarly, neither the 

ute nor the regulations address the questio

whether the Congressional campaign comm

may contribute over and above the com

$17,500 limit imposed on the Senatorial 

national committees with respect to Senate 

didates. Nor does the legislative history di

these matters. The General Counsel said, "I

it appears that such transactions were simpl

contemplated."

In the absence of any statutory or regul

prohibition on the contributions in question 

clearly stated legislative intent, the Ge

Counsel recommended that the Commission 

fino reason to believe" that a violation of the 

had occurred. The Commission made su

finding and closed the case.

CONFERENCE SERIES ON ELECTION LA W

In upcoming months, the Federal Ele

tion Commission will hold two conferences 

federal campaign finance laws. The conf

ences will include workshops On candid

campaigns, party and PAC activity, contrib

tions and reporting. In addition, a repr

sentative of the Internal Revenue Serv

will be available to answer election-relat

tax questions.

The schedule for the conferences 

given below. For more information, conta

the FEC's Information Services Division 

800/424-9530 or 202/376-3120.

Philadelphia: September 14-15

This conference will be held at the Ho

day Inn-Center City. The conference fee 

$110.

San Francisco: October 12-13

Cosponsored with the California Sec

tary of State's Office, this conference w

feature a special workshop on the new sta

campaign finance law presented by the Ca

fornia Fair Political Practices Commissio

The conference will be held at the Holid

Inn-Eisherman's Wharf; the fee is $100. '
September 1989 FEDERAL ELECTION COMMISSION Volume 15, Numbe

COMMON CAUSE v: FEC (85-1130)

On May 30, 1989, the U.S. District Court for

the District of Columbia issued a memorandum

opinion in Common Cause v. FEC (Civil Action

No. 85-1130), denying in part.the plaintiff's motion for summa.ry judgment. The case pertained

to an administrative complaint filed by Common

Cause alleging excessive contributions resulting

from affiliation or coordination between a 110nconnected committee and a national party committee. With regard to most parts of the the

complaint, the court found that the Com mission's

dismissal was not contrary to law. However, the

court did remand one issue from the original

complaint back to the Commission for its

consideration.

Background

Common Cause filed suit in 1985 after the

Commission had dismissed its administrative complaint, which charged that the Republican National Independent Expenditure Committee (.RNIEC),

a noneonneeted committee, was actually affiliated with the National Republican Senatorial

Committee (NRSC) and that its expenditures during 1983 on behalf of then-Senator Dan Evans'

election campaign were not independent and

ought to have been aggregated with NRSC's contribution limit for that election. The Commission

had investigated the matter and found "no probable cause to believe" that a violation of the law

had occurred.

The plaintiff asked the court to find that

RNIEC and NRSC were affiliated committees, or

that they had coordinated their expenditures on

behalf of Senator Evans. (Either finding would

result in excessive contributions by NRSC on

behalf of the Senator's eampaign.) Common

Cause claimed that the FEC, after investigating

the case, should have concluded that there was

affiliation or coordination between the committees because:

o Both co-founders of RNIEC had been officers of

NRSC. One co-founder was Rodney Smith, a

former treasurer of NRSC; the other co-founder, Senator John Heinz, was a former chairman

and member of NRSC. Both men left NRSC in

1983, but their prior involvement with that

committee indicated to Common Cause that

their new committee, RNIEC, was affiliated

with NRSC and that the two committees had

coordinated their activities in the Evans

campaign.

o RNIEC used a contributor list which had belonged to NRSC to solicit contributions to

RNIEC. Mr. Smith had taken the list with him

7

when he left that committee. Common Cau

contended that this duplication of solicited pe

sons further indicated that the two committe

were not independent of each other and we

affiliated.

District Court Decision

In deciding that the Commission's dismis

of Common Cause's principal allegations was re

sonable, the court relied on the General Counse

brief in the compliance matter.

Affiliation. Addressing the question of affi

ation, the court determined that the Gene

Counsel provided the Commissioners with 

acceptable rationale for finding that NRSC a

RNIEC were unaffiliated committees. The Co

mission had considered three facts: (1) Sena

Heinz's dual membership on the committees, 

Mr. Smith's former involvement with NRSC 

treasurer and (3) RNlECls 'use of NRSC's contrib

tor list. With regard to the first matter, t

General Counsel had concluded that the du

membership of Senator Heinz did not cause t

committees to be affiliated because another p

son, Senator Richard Lugar;. was the "controlli

and key member" of NRSC and because Sena

Heinz had not been involved with NRSC's effo

on behalf of Senator Evans.

As to Mr. Smith's prior work as treasurer 

NRSC, the court said that the plaintiff had poi

ed to nothing in the statute or legislative histo

of the Act that forbade an officer of a politi

committee to leave that committee and form 

unaffiliated one.· Mr. Smith's departure fro

NRSC, the court said, was a sufficient reason n

to presume affiliation between RNIEC and NRSC

Finally, the General Counsel had noted th

the use of the common contributor list mig

suggest a "similar pattern of contributions," wh

is one indication of affiliation under 11 C

110.3(a)( 1)(i0. In this case, however, the Gene

Counsel's investigation revealed that NRSC h

expressed objections to RNIEC's use of its cont

butor list; this opposition, in the General Cou

sel's view, undermined a presumption of affil

tion based on the use of the common list. T

court found this view reasonable.

Coordination. Common Cause claimed th

the committees had coordinated their efforts d

ing the Evans campaign (which would have d

qualified RNIEC's exenditures as "independe

under 2 U.S.C. §431(l7». As evidence, Comm

Cause cited the committees' use of common v

dors. The General Counsel's investigation, ho

ever, revealed that the common vendors 

attorney and a consultant who had .worked 

both committees) had not provided the type 

services that normally call for a presumption 

coordination. Moreover, neither one had perfor

ed any services for RNlEC after September 19

when Senator Evans was initially appointed to 

continu
September 1989 FEDERAL ELECTION COMMISSION Volume 15, Numb

the vacant seat of the late Senator Henry J aekson. That is, the vendors had both ceased their

work with the committees before the Evans campaign began.

The plaintiff argued that the FEG should

have presumed that the committees' expenditures

were coordinated on the basis of Senator Heinz's

and Mr. Smith's prior involvement with and knowledge of NRSC affairs and strategies. The court,

however, accepted the General Counsel's view

that neither man was involved in activities at

NRSC that specifically related to the Evans campaign. The Commission, therefore, had acted

reasonably in finding that there was no coordination between the activities of the two committees.

Affiliation with RNC. Finally, the court

found that the Commission had failed to consider"

one issue raised in Common Cause's administrative complaint. Common Cause had alleged that

RNIEC was also a political committee of the

Republican National Committee "by virtue of its

ties to the national party." The court accepted

the plaintiff's view that the Commission should

have addressed this question as distinct from the

issue of affiliation between NRSC and RNlEC.

The court remanded the question to the FEC for

its consideration. With regard to the other issues,

the court dismissed the claims with prejudice.

On July 31, 1989, Common Cause filed a

notice of appeal.

FEe v, CALIFORNIANS FOR

A STRONG AMERICA (CV-88-6449-AWT(Ex»

On June 22, 1989, the U.S. District Court for

the Central District of California issued a final

order and default judgment in FEC v. Californians

for a Strong America (No. CV-88-6449-A WT(Ex».

The court decreed that the committee and its

treasurer, Albert J. Cook, had violated the election law by:

o Failing to file a 1987 mid-year report on time

(2 U.S.C. S434(a)(4)(A)(iv));

o Failing to properly report independent expenditures incurred for radio and television advertisements and fundraising letters advocating

the defeat of Senator Alan Cranston in the 1986

Senate election in California (2 U.S.C.

434(b)(6)(B)(iii)); and

o Failing to include a disclaimer notice in at least

five solicitation letters (2 U.S.C. §44Id(a)(3).

The court ordered the defendants to comply

with the law's reporting requirements within 15

days of the judgment and to pay a civil penalty of

$15,000 ($5,000 for each violation). The court

also ordered the defendants to pay the FEC's

court costs and to refrain from future similar

violations of the election law.

8

FEe v. BOB RICHARDS

FOR PRESIDENT COMMITTEE (89-{)254)

On June 29, 1989, the U.S. District Cour

the District of Columbia granted the FEC's 

tion for summary judgment in FEC v. 

Richards for President Committee. Waco, T

(Civil Action No. 89-0254). The court ordered 

defendants to comply fully with the terms 

conciliation agreement entered into with 

Commission a year before. Under 

agreement, the defendants had admitted. to se

al violations of the Federal Election Camp

Act. and had agreed to pay a civil penalt

$12,000 and to file various reports and statem

required under the election law.

MILLER v. FEC

On June 29t 1989, the U.S. District Cour

the District of Columbia denied the plain

motion for summary judgment in Harry P. M

Jr. v. FEC (Civil Action No. 89-0094).

Mr. Miller filed suit in Janua.ry 1989 clai

that the Commission had acted contrary to la

dismissing an administrative complaint tha

had filed the previous October against B

Quayle 88, the 1988 Republican Presidential 

eral election campaign cornmitee. The comp

had alleged that several Texas state officials 

conducted fraudulent activities on behalf of 

Bush-Quayle campaign. Informed of the cha

by the Commission, the respondents denied 

knowledge of the alleged violations. The C

mission subsequently voted to find uno reaso

believe" that the violations alleged by Mr. M

had occurred and dismissed the matter.

Finding that the Commission's dismissa

Mr. Miller's complaint was reasonable, the c

said that the plaintiff failed to show that the 

had before it any evidence of illegal activity. 

court concluded, "Considering the unfocused 

gatlons.••and respondents' reply [indicating 

knowledge of criminal activity], the FEC's d

sion to dismiss Mr. Miller's complaint was cle

not 'contrary to law.'"

FEC v. FRANKLIN

On July 26,· 1989, the U.S. District Cour

the Eastern District of Virginia issued an ord

FEC v. William Franklin. a/k/a Billy A. Fran

requiring the defendant to respond fUlly to 

FEC questionnaire that had been sent to him 

year. Among other things, the FEe had asked 

Franklin-a private-investigator who is also 

attorney-to identify the person who had h

him during the 1988 Senate campaign in Vir

to investigate Senator Charles Robb's pers

life. The court also ordered the FEC no

disclose the identity of that person until a fo

enforcement action commences, or the c
September 1989 FEDERAL ELECTION COrvllVllSSIOI\J Volume 15, Numbe

waives confidentiality, or until disclosure is mandated by the election law.

Background

In October 1988 Mr. Robb, the Democratic

nominee for the U.S. Senate in Virginia, filed a

complaint with the Commission alleging that Mr.

Franklin's unknown employer had violated the

election law by failing to report payments made

to Mr. Franklin to investigate rumors linking the

candidate with persons allegedly implicated in

drug use or drug trafficking. The Robb campaign

also alleged that the contribution limits may have

been violated by Mr. Franklin's client. Conducted

during the height of the 1988 campaign, Mr.

Franklin's investigation was the subject of several

news stories.

After finding "reason to believe" that the law

had been violated, the Commission sent Mr.

Franklin a questionnaire about the nature and

purpose of his investigation and asking on whose

behalf it was conducted. Mr. Franklin answered

some of the questions, but he refused to identify

the person who had hired him, invoking attorneyclient privilege. The FEC subsequently petitioned

the court to order Mr. Franklin to respond fUlly to

the questions.

District Court Decision

Mr. Franklin challenged the FECiS actions on

four grounds:

o The FEC lacked subject-matter jurisdiction

over the original complaint because the Robb

campaign had identified only "J ohn Doe, Employer of William Franklin" as the respondent.

This fact, Mr. Franklin argued, prevented the

PEC from fulfilling its statutory requirements

in acting on the complaint.

o The complaint from the Robb campaign was

inadequate to launch an PEC investigation.

o The FEC's finding of "reason to believe" was

arbitrary, capricious and contrary to law.

o Attorney-client privilege permitted him to preserve the anonymity of his client.

The court rejected all of these arguments.

In ruling on the FEC's jurisdiction, the court

concluded that the Commission had fulfilled its

stautory requirements in acting on the complaint

to the extent that it was possible. The election

law requires that the Commission notify respondents of complaints filed against them; the Commission must also give such persons the opportunity to respond to the allegations. 2 U.S.C.

§437g(a)(l). Although the Commission did not

know the name of the respondent, the court found

that the Commission had "met the requirements

of the law" by communicating with the unknown

respondent through Mr. Franklin.

The court also rejected Mr. Franklin's argument that the Robb complaint was inadequate on

the grounds that it did not identify the respondent

or allege "a clear and concise recitation of the

9

facts which describe a violation, II as requi

under 11 CF R 111.4(d)(3). "While the compla

did not identify the respondent by name," 

court said, "the complaint clearly identified 

employer of Franklin as the respondent." T

court further said that the regulations did 

require "a complete factual and legal account o

violation." Filing a complaint is only the fi

step in the enforcement process, the co

emphasized.

With regard to Mr. Franklin's charge that 

Commission's "reason to believe" finding was c

trary to law, the court observed that "agen

actions are not generally ripe for judicial revie

unless they constitute "final agency actions." 

most cases, a "reason to believe" finding is 

preliminary action in the enforcement proce

leading to a formal investigation. It is not a fi

action. Furthermore, the court noted, "reason 

believe" findings have not previously been 

viewed by courts unless the alleged violation W

novel or unless the press exemption to the repo

ing requirements was at issue. The Robb co

plaint involved neither novel issues nor the pr

exemption. Adding that Mr. Franklin had 

demonstrated that an FEe investigation wo

injure himself or his client, the court rejected 

Franklin's argument that the Commission's find

was "contrary to law."

The court also found that Mr. Franklin h

not established that the attorney-client privile

applied to his case. Although he WaS a practic

attorney, Mr. Franklin was questioned by the F

about his activity as a private investigat

"Franklin has not demonstrated that the cli

retained him in his capacity as an attorney or th

[he] provided legal advice to the client relating 

Franklin's investigation," the court said.

For these reasons, the court ordered M

Franklin to provide written answers to the FE

questions within 75 days. Furthermore, the co

ordered that "upon pain of contempt, no mem

or employee of the FEC, or any other pers

disclose to any person who is not a member 

employee of the FEC with a need to know 

identity of Franklin's client in the Robb investi

tion." This protective order would apply unl

and until a formal enforcement action was beg

or Franklin's client waived confidential

restrictions, or disclosure was otherwise requi

by the law.

NEW LITIGATION

FEC v. Colorado Republican

Federal Campaign Committee _

The Commission asks. the district court 

declare that the Colorado Republican Fede

Campaign Committee (the federal account of t

Colorado State Republican Committee) and Dou

las L. Jones, as treasurer, violated the electi

continu
September 1989 FEDERAL ELECTION COMMISSION Volume 15, Numb

law by:

o Failing to report and to itemize expenditures

made in connection with the 1986 Colorado

Senatorial election (2 U.S.C. §S434(b)(4){H)(iv)

and (6){B){iv»; and

o Making a coordinated party expenditure in excess of the legal limit set forth in 2 U.S.C.

S44Ia{d)(3)(A).

The FEC contends that, during the 1986 election, the Colorado committee, after delegating its

right to make coordinated party expenditures on

behalf of the Republican Senatorial candidate to

the National Republican Senatorial Committee,

spent $15,000 in April 1986 for a radio advertisement criticizing a Democratic candidate for the

Senate. The Commission claims that the expenditure was a coordinated party expenditure under

section 441a{d) of the election law. (The Democratic candidate, at the time the ads were begun,

was the sole candidate for his party's nomination

to the Senate; he eventually became the Democratic nominee in the November general election.

The defendants' ads ran through August 1986.)

Because the Colorado committee had transferred

its own spending limit for the Senate general

election to the Republican Senatorial committee,

the Commission considered the expenditure for

the ad to be excessive.

The FEC also asks the court to assess a civil

penalty of the greater of $5,000 per violation or

an amount equal to the amounts involved in the

violations committed, and to permanently enjoin

the defendants from similar future violations of

the law.

D.S. District Court for the District of Colorado, Civil Action No. 89-1159, July 7, 1989.

NAMES OF CORPORATE AND LABOR PACS

The names of separate segregated funds-e-i.e.,

political committees established by corporations

and labor organizations-are subject to specific

requirements. (Separate segregated funds are popularly referred to as corporate and labor PACs.)

Official Name

What requirements apply to the official name

of a corporate or labor PAC,? The name of a

separate segregated fund must include the full

name of its connected organization. 2 U.S.C.

§432(e){5); 11 CFR 102.14(0). The connected organization is the corporation (profit or nonprofit) or

labor organization that establishes, administers or

financially supports the separate segregated fund

10

by paying for its administrative and solicita

expenses. 11 CFR 100.6.

Does the name of a PAC established b

subsidiary or other subordinate unit also nee

include the parent organization? No. The P

name need only include the official name of 

connected organization, which, in this case, is 

lower level organization. 11 CPR 102.14(c).

What if a PAC is jointly established by tw

more affiliated organizations? The PAC's n

must include the full names of all its conne

organizations. AOs 1988-42, 1988-14 and 1980

Maya PAC's name include the name o

affiliated organization that is not its conne

organization'? Yes. As long as the PAC's n

includes the full name of its connected organ

tion, there is nothing in the law to preclude 

addition of an affiliate's name. However, the 

should not list the affiliate as a connected org

zation on its Statement of Organization. 

1989,..8.

May a PAC exclude abbreviations like "

and "Corp." from its official name'? No. A P

official name must include the name of its 

nected organization in its entirety. AOs 198

and 1980-10. However, PACs are permitted to 

shortened versions of their official names

explained in the section below.

May a PAC's official name use the acro

"PAC" instead of "Political Action Committ

Yes. The acronym is sufficiently well kn

through public media usage to permit its use i

official name. AO 1988-42.

Abbreviated Name

When maya PAC use a shortened form o

official name'? In several advisory opinions, 

Commission has said a PAC may use an abb

ated version of its name on checks and letterh

See, for example, AO 1987-26.

If a PAC adopts an abbreviated name, 

both its full, official name and its abbrev

name must be included on:

o Its Statement of Organization;

o Its FEe reports; and

o Any' public advertising notices! C'dtsctalm

required on communications. 11 CFR l02.14

lYhese notices must be displayed on com

nications that qualify as independent expendit

and on other publicly advertised communica

that expressly advocate the election or defea

candidates or solicit funds on their behalf. 11 

109.3 and 110J 1.
Corrections to Name

FEDERAL ELECTION COMMISSION Volume 15, Numbe

OPINIONS

1987-31.: Solicitable membership classes of sec

ities exchange (reconsideration), 4:3

1988-37: Affiliated status of two corporate PA

after leveraged buy-out, 1:6

1988-44: Effect of statute of limitations on co

mittee's debts, 2:4

1988-45: Definition of national party committ

2:4

1988-46: Corporation's solicitation of license

2:4

1988-47: Publisher's donation of free magazines 

candidate prohibited, 1:6

1988-48: Contributions to trade association P

matched with charitable donations, 2:5

1988-49: Federal bankruptcy trustees not con

ered government contractors, 2:5

1989-1: Payment to Congressional employee 

manuscript not an honorarium, 6:4

1989-2: Committee's settlement of debt w

corporate creditor, 6:4

1989-3: Stockholder contributions to trade as

ciation PAC through payroll deduction, 6:5

1989-4: Federal committee's sale of assets 

state committee, 7~4

1989-5: Refund of contribution made in the na

of another, 7:4

1989-6: Contribution of stock to Congressio

candidate, 7:5

1989-7: Corporation's matching of PAC c

tributions with donations to charity, 8:4

1989-8: Solicitable class and name of PAC est

lished by corporation affiliated with partnersh

8:4

1989-9: PAC contributions matched with ch

table donations, 8:5

1989-10: Candidate eornmtttee's financial sta

after embezzlement by former treasurer, 9:3

1989-12: Act's preemption of state law govern

contributions, 9:3

This cumulative index lists advisory op

ions, court- cases, MUR summaries and 800 L

articles published in the Record during 1989. T

first number in each citation refers to the "nu

ber" (month) of the Record issue; the seco

number, following the colon, indicates the p

number in that issue.

September 1989

If a PAC's official name does not include the

complete name of its connected organization or if

its abbre"iated form is not informative enough,

what should the PAC do? The PAC should modify

its name to comply with 11 CFR l02.14(c) and,

within 10 days, file an amended Statement of

Organization identifying the change. 11 CFR

102.2(a)(2). If necessary, the PAC should also

correct its checks and letterhead.

What other requirements apply to the abbreviated version of a PAC's name? The PAC must

use "a clearly recognized abbreviation or acronym

by which the connected organizatlon is commonly

known," 11 CFR I02.14(c). An abbreviated name

must adequately identify the connected organization to the public,

What are some examples of adequate and

inadequate abbreviations? In AO 1980-10, the

Commission said that "United Telecom" was an

acceptable abbreviation for United Telecommunications, Inc. After considering several proposed

abbreviations for Mid-America Dairymen, Inc.,

the Commission approved TTMid-Am Dairymen"

and "Mid-America Dairymen" but rejected "MidAm" and "Mid-America." AO 1980-23. In disapproving tlANRI! as an abbreviation for American

Natural Resources, Inc., the Commission pointed

out that, in previously approved abbreviations,

"the most significant part of the corporations'

identities were used, Le., 'Telecom' and 'Dairymen.' 11 AO 1980-86. The Commission also regarded tlBTNB" as an insufficient abbreviation for Birmingham Trust National Bank. AO 1980-98.

Is an abbreviation that appears in a stock

exchange listing or in a corporate directory like

Standard and Poor's considered acceptable? Not

automatically. The Commission may, however,

consider such sources when deciding whether an

abbreviation provides adequate public notice of

the connected organization. For example, in AO

1987-26 the Commission said that the Principal

Mutual Life Insurance Company could use its

service mark, "Principal Financial Group," as the

abbreviated name of its PAC because the company publicized the service mark in its annual

report and listed itself under the service mark in

Standard and Poor's. See also AO 1980-86.

, .

COURT CASES

FEC v;

-AFSCME-PQ, 1:11

-Batts, Committee to Elect, 5:8

-Bookrnan & Associates, 6:8

-Braun for Congress Committee, 1:10

-Bull for Congress, I: 11

11
September 1989 FEDERAL ELECTION COMMISSION

-Californians for a Strong America (88-

1554), 1:9; (88-6499), 1:11 and 9:8

-Citizens Party, 1:12 and 7:6

-Colorado Republican Federal Campaign

Committee, 8:9

-Dietl for Congress, 1:10

-Franklin, 9:8

-Friends of Isaiah Fletcher, 6:8

-Furgatch (88-6047), 5:7 and 7:7

-Haley Congressional Committee, 1:9

-Holmes Committee, 3:3

-Life Amendment PAC, 1d 1 and 8: 11

-National Organization for Women, 7:7

-Populist Party, 1:12 and 5:8

-Richards for President (89-0254) 4:9 and

9:8; (88-2832), 5:8

-Rodriguez, 1:10

-Survival Education Fund, Ine., 3:4

-Taylor Congressional Committee, 1:10

-Weinberg, 5:9

Fund for a Conservative Majority, Debtor, 3:4 and

8:10

Goland v. U.S. and FEC, 6:8

United States v. Goland, 6:8

v. FEe

-Common Cause (85-1130), 9:7

-Common Cause (87-2224), 3:3

-Common Cause (89-0524-GAG), 4: 10

-Maine Right to Life Committee, Inc., 4:10

-Miller, 3:3 and 9:8

-Stern, 3:4

-USDC, 1:9 and 3:3

FEDERAL ELECTION COMMISSION

999 E Street, NW

WaShington, DC 20463

Official Business

Volume 15,Numbe

MUR SUMMARIES

MURs 1528/1739: Party activities: prohib

funds, transfers, allocations and loans, 4:7

MUR 2175: Excessive and prohibited contr

tions accepted by 1984 Presidential campa

3:6

MUR 2262: Presidential candidate's failure 

register and report on time, B:5

MUR 2286: Membership organization's polit

activity, 6:7

MUR 2356: PAC's failure to file reports on ti

4:7

MUR 2545: Excessive contributions made and 

cepted by PAC, 5:6

MUR 2594: Contributions from party Senato

com mitee to House candidates and from C

gressional committee to Senate candidates, 9

800 LINE

Debt retirement by candidate committees, 1:7

Designating a principal campaign committee, 3

Multicandidate committees, 7:10·

Names of corporate and labor PACs, 9:10

Opinion polls, 8:8

Political activity and the workplace, 7:8

Recordkeeping rules for all committees, 5:9

Bulk Rate Mail

Postage and Fees Paid

Federal Election Commission

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