October 1998 Federal Election Commission Volume 24, Number 10

Table of Contents

Commissioners

1 Chairman Aikens Retires

Reports

1 October Reporting Reminder

Court Cases

2 Judd v. FEC

2 FEC v. Al Salvi for Senate

Committee

2 New Litigation

Compliance

3 Nonfilers

Regulations

3 Final Rules Requiring Electronic

Filing by Publicly Funded

Presidential Candidates

4 Soft Money Hearing Rescheduled

4 Advisory Opinions

Audits

5 Audit Reports Made Public

6 Federal Register

6 Index

October Reporting

Reminder

Committees should take note of

the following due dates for October

reports:

• Third quarter reports for quarterly

filers are due on October 15

(reporting period July 1-September

30).

• Monthly reports for monthly filers

are due on October 20 (reporting

period September 1-30).

• Pre-general reports are due on

October 22 (reporting period

October 1-14). Candidate committees must file this report if their

candidate is running in the general

election. PACs and party committees that file quarterly must file

this report if they make contributions or expenditures in connection

with an election during this

reporting period. PACs and party

committees that file on a monthly

schedule must file a pre-general

report in lieu of the scheduled

November monthly report.

In addition to these reports,

candidate committees may also have

to file 48-hour notices on lastminute contributions, and PACs and

party committees may need to file

24-hour reports to disclose any lastminute independent expenditures.

Reports

(continued on page 3)

Commissioners

Chairman Aikens Retires

Chairman Joan D. Aikens retired

from the Commission last month

after 23 1/2 years of dedicated and

distinguished public service.

Chairman Aikens was nominated

to the newly created Commission in

1974 by then Senate Minority

Leader Hugh Scott. A native

Pennsylvanian, Ms. Aikens was

very active in Pennsylvania politics,

beginning as a volunteer for Richard

Nixon in the 1960 Presidential

election. She served as a precinct

captain, President of the Pennsylvania Council of Republican Women

and, eventually, as a member of the

Pennsylvania Republican State

Committee.

After being appointed by President Ford and confirmed in April of

1975 as one of the original Members

of the FEC, Chairman Aikens was

subsequently reappointed in 1976,

1981, 1983 and 1989 by Presidents

Reagan and Bush. At the time of her

retirement, she was serving her

fourth term as Chairman.

Chairman Aikens—an ardent

believer in the First Amendment and

its overriding importance in interpreting federal election law—will be

best remembered by the election law

community as a fair and impartial

(continued on page 3)
Federal Election Commission RECORD October 1998

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, Vice Chairman

Lee Ann Elliott, Commissioner

David M. Mason, Commissioner

Danny L. McDonald,

 Commissioner

Karl J. Sandstrom, Commissioner

Darryl R. Wold, Commissioner

James A. Pehrkon, Acting Staff

 Director

Lawrence M. Noble, General

 Counsel

Published by the Information

 Division

Louise D. Wides, Director

Angela Rucker, Editor

Gregory J. Scott, Associate Editor

http://www.fec.gov

Court Cases

New Litigation

FEC v. Freedom’s Heritage Forum

The FEC asks the court to find

that Freedom’s Heritage Forum, a

political committee, and its treasurer, Dr. Frank G. Simon, made

excessive contributions to a candidate and failed to report the contributions to the FEC. The FEC also

contends that the Forum failed to

include required disclaimers on

flyers it distributed in support of the

candidate.

The Commission also asks the

court to declare that the candidate

who benefited from the Forum’s

advocacy, Timothy Hardy, knowingly accepted the Forum’s impermissible contributions as well as

more than $4,000 in prohibited

corporate in-kind contributions from

another corporation. Mr. Hardy was

a candidate in the 1994 Republican

primary for Kentucky’s 3rd Congressional District.

Excessive Contributions. The

Commission alleges that the Forum

made contributions of $23,515—or,

$22,515 above its $1,000 contribution limit—in the form of expenditures to host a campaign event and

to pay for flyers on behalf of Hardy

for Congress, Mr. Hardy’s principal

campaign committee. The Forum

claims that its disbursements were

independent expenditures.

The Federal Election Campaign

Act (the Act) defines independent

expenditures as disbursements for a

communication that expressly

Judd v. FEC

On August 20, the U.S. Court of

Appeals for the District of Columbia

Circuit denied plaintiff Keith Judd’s

motion to have the court reexamine

its decision to dismiss this case for

lack of prosecution. See the June

1998 Record, p. 5.

U.S. Court of Appeals for the

District of Columbia Circuit, 98-

1078. ✦

FEC v. Al Salvi for Senate

Committee

On August 10, the FEC refiled

this case after the U.S. District

Court for the Northern District of

Illinois, Eastern Division, dismissed

it on technical grounds. The case

that was resubmitted is virtually

identical to the one submitted on

March 3. In the suit, the FEC asks

the court to find that, during the

advocates the election or defeat of a

clearly identified candidate and that

is made without cooperation or

consultation with the candidate or

his/her committee. 2 U.S.C.

§431(17). Commission regulations

explain that the independence of an

expenditure is negated by coordination with the candidate or campaign.

11 CFR 109.1(b)(4)(i). Expenditures

are coordinated if they are based on

information about the candidate’s

plans, projects or needs that is

provided by the campaign to the

person making the expenditures,

with a view toward having an

expenditure made. 11 CFR

109.1(b)(4)(i)(A).

If an expenditure does not qualify

as an independent expenditure, it is

treated as an in-kind contribution to

the candidate (unless it is otherwise

exempted). 11 CFR 109.1(c). The

Act limits the amount that persons

(other than multicandidate committees) may contribute to a federal

candidate to $1,000 per election. 2

U.S.C. §441a(a)(1)(A).

In this case, the Commission

alleges that, through direct meetings

between Dr. Simon and Mr. Hardy

before he declared his candidacy,

and then during his candidacy, the

Forum was informed of the Hardy

campaign’s ideas and needs. Consequently, the Forum’s expenditures

were coordinated with the campaign

and constituted excessive in-kind

contributions to the campaign. The

Commission also contends that the

Forum and Dr. Simon violated the

Act’s reporting provisions by

inaccurately disclosing these

contributions to the Commission.

Lack of Disclaimers. The Commission also alleges that the Forum

failed to use disclaimers on the

flyers. When public political

communications expressly advocate

the election or defeat of a clearly

identified candidate or solicit

contributions, the Act requires that

the communications include a

disclaimer. The disclaimer must

state who paid for it and whether or

not it was authorized by a candidate or

1996 election cycle, the Al Salvi for

Senate Committee and its treasurer

violated the reporting provisions of

the Federal Election Campaign Act.

The FEC contends that the committee misreported, and failed to report

on time more than $1.1 million in

contributions and loans. See the

April 1998 Record, p. 4.

U.S. District Court for the

Northern District of Illinois, Eastern

Division, 98C-1321. ✦
October 1998 Federal Election Commission RECORD

3

For more information on 1998

reporting dates:

• Visit the FEC’s web site at http://

www.fec.gov to view the reporting

tables;

• Obtain a faxed copy of the reporting tables by calling FEC Faxline

(202/501-3413, request documents

586 and 587);

• See the reporting tables in the

January 1998 Record; or

• Call and request the reporting

tables from the FEC at 800/424-

9530 (press 1) or 202/694-1100. ✦

Reports

(continued from page 1)

Nonfilers

The campaign committees of the candidates listed below failed to file

required campaign finance disclosure reports. The list is based on recent FEC

news releases. The FEC is required by law to publicize the names of

nonfiling candidate committees. 2 U.S.C. § 438(a)(7). The agency pursues

enforcement actions against nonfilers on a case-by-case basis. ✦

Compliance

administrator of the FECA, who

steadfastly refused to compromise

her core principles.

In a farewell message to the staff,

Chairman Aikens said, “I leave the

Commission after 23 1/2 years with

a great sense of pride and satisfaction for what we have accomplished

and a great deal of hope for the

future and this agency’s ability to

meet the challenges that will face it,

no matter how difficult.” ✦

Commissioners

(continued from page 1)

Candidate Office Sought Report Not Filed

Cook, William R. House NY/27 Pre-Primary

Crawford, Jerry House NY/28 Pre-Primary

Cusack, Patrick M. House FL/21 Pre-Primary

Fiumefreddo, Peter House NY/17 Pre-Primary

Jennings, Dorothy C. House MD/07 Pre-Primary

Meeks, Gregory W. House NY/06 Pre-Primary

Owens, Major Robert Odell House NY/11 Pre-Primary

Peoples, Crystal D. House NY/30 Pre-Primary

Wayman, Kenneth L. Senate MD Pre-Primary

Final Rules Requiring

Electronic Filing by Publicly

Funded Presidential

Candidates

On August 20, the Commission

approved the final rules—and the

Explanation and Justification for the

rules—that require Presidential

candidates who voluntarily accept

public funding to file their campaign

finance reports electronically. The

final rules were published in the

August 27 Federal Register (63 FR

45679) and transmitted to Congress.

The Commission will announce an

effective date once the rules have

been before Congress for 30 legislative days.

The rules apply only to Presidential candidate committees that

computerize their campaign finance

records. Committees will file reports

electronically—either by mailing a

diskette with the information or by

transmitting the data via the Internet

to the FEC. Exempt from the

electronic filing requirements are

candidates’ Statements of Organization (Form 1), Statements of Candidacy (Form 2) and candidate

agreements. The changes affect 11

CFR 9003.1 and 9033.1.

Electronic filing by Presidential

committees is intended to enhance

public disclosure and to save a

substantial amount of time and

Commission resources. See the July

1998 Record, p. 7.

The full text of the final rules

governing electronic filing by

Presidential campaign committees

appears in the Federal Register. It

also is available at the FEC’s web

site (http://www.fec.gov—click on

What’s New) and through FEC

Faxline (202/501-3413—request

document 234). ✦

Regulations

(continued on page 4)

campaign committee. 2 U.S.C.

§441d.

The Commission states that some

of the flyers the Forum distributed

included only information about

who paid for them, but did not

include a statement indicating

whether or not they were authorized

by a candidate. One set of flyers

distributed by the Forum contained

no disclaimer at all.

Candidate’s Knowing Acceptance

of Contributions. The Commission

further alleges that the Hardy

committee violated the Act by

knowingly accepting the excessive

contributions from the Forum. 2

U.S.C. 441a(f). The Commission

also contends that Mr. Hardy

knowingly violated the Act’s

prohibition on accepting corporate

contributions when he used a

corporation’s bulk mailing permit to

mail campaign literature. 2 U.S.C.

§441b(a). Although the Hardy

committee paid for the mailings, it

derived a financial benefit of $4,183

by using the bulk mailing permit.

U.S. District Court for the

Western District of Kentucky at

Louisville, 98CV-549-5, August

25, 1998. ✦
Federal Election Commission RECORD October 1998

4

Soft Money Hearing

Rescheduled

The FEC’s public hearing on soft

money has been rescheduled for

October 21. The hearing will be

held in the FEC’s hearing room at

999 E St., NW, in Washington, DC.

The deadline for comments has been

extended to October 2. Anyone

wishing to speak at the hearing

must submit written comments to

the FEC by October 2, and indicate

in their written comments that they

would like to testify.

To view the Notice of Proposed

Rulemaking on this matter, see the

July 13 Federal Register (63 FR

37721). The NPRM is available at

the FEC’s web site (http://

www.fec.gov) and at FEC Faxline

(dial 202/501-3413 and request

document 230). The NPRM is also

available from the Public Records

Office (call 800/424-9530 or 202/

694-1120).

Comments must be submitted in

either written or electronic form to

Susan E. Propper, Assistant General

Counsel. Written comments should

be mailed to the Federal Election

Commission, 999 E St., NW,

Washington, DC 20463. Faxed

comments should be transmitted to

202/219-3923, with a copy mailed

to the preceding address to ensure

legibility. Comments also may be

sent by e-mail to

softmoneynpr@fec.gov. In order to

be considered with the other comments, electronic submissions must

include the commenter’s full name,

e-mail address and postal mail

address. ✦

AO 1998-14

Contributions from

Micronesia, Palau and the

Marshall Islands

Eugene F. Douglass for U.S.

Senate, the principal campaign

committee of Eugene F. Douglass,

may not accept contributions from

citizens of the Marshall Islands, the

Federated States of Micronesia or

the Republic of Palau because the

citizens of those states are considered foreign nationals under the

Federal Election Campaign Act (the

Act). The Compact of Free Association with the United States, which

has been signed by all three states

and the United States, does not

confer U.S. citizenship or the status

of U.S. national upon the residents

of these states, nor does it give

permanent resident alien status to

the residents.

Mr. Douglass, who is running for

the Republican nomination to

represent Hawaii in the U.S. Senate,

plans to run campaign advertisements soliciting contributions in

newspapers throughout the Pacific

region. Some of those papers likely

will reach the citizens of the

Marshall Islands, Micronesia and

Palau.

The Act prohibits foreign nationals from making contributions in

connection with any election to

political office. 2 U.S.C. §441e.

Those foreign nationals, however,

who have permanent residence in

the United States are exempt from

this prohibition. They may make

contributions. 2 U.S.C. §441e(b)(2).

In AO 1994-28, the Commission

concluded that citizens of American

Samoa could make contributions in

connection with U.S. elections

because their status—being U.S.

Nationals—was virtually the same

as being a permanent resident. As

U.S. Nationals, American Samoans

can be admitted for permanent

residence in the United State at any

time, without having to meet any

special entry requirements. They are

exempt from the definition of

foreign national.

The situation is different with the

three Compact states. They are

considered sovereign nations.

Further, the Compact agreement

does not grant U.S. citizenship or

U.S. national status upon the states’

inhabitants. In fact, it specifically

denies the automatic granting of

permanent resident status to the

citizens of the three states and

instructs them to follow the usual

administrative procedures available

to aliens in securing permanent

resident status. In addition to the

differences under immigration

statutes, Compact states do not have

a Delegate to the U.S. Congress as

is the case for American Samoa.

Consequently, the residents are

considered foreign nationals for

purposes of the contribution prohibitions in the Act.

Given the multiethnic identity of

the U.S. population, the Douglass

Committee is not expected to screen

the surnames of its contributors for

evidence of possible foreign national status. Nonetheless, the

committee should take minimally

intrusive steps to ensure that contributions do not come from foreign

nationals, as follows:

• Any advertisements in the public

news media that could reach

Compact nations should contain a

clear and conspicuous printed

summary of the prohibitions

against contributions by foreign

nationals.

• If the committee receives a

contribution from within the

Compact nations (as evidenced by

the postmark, contributor address

or bank identification), it should

make further inquiry as to the

nationality of the contributor.

Date Issued: August 13, 1998;

Length: 5 pages. ✦

Advisory

Opinions

Regulations

(continued from page 3)
October 1998 Federal Election Commission RECORD

5

AO 1998-16

Use of Security Personnel by

PAC Official

Amway may pay for executive

security personnel to accompany its

president, Richard M. DeVos, Jr.,

when he travels in connection with

business on behalf of Restoring the

American Dream, a political action

committee he chairs. Such payments

do not constitute a contribution or

expenditure for purposes of the

Federal Election Campaign Act (the

Act) and thus would not result in

impermissible corporate contributions.

Amway executives such as Mr.

DeVos are required by corporate

policy to have an executive security

officer present during all travel

away from office headquarters. This

security feature is in effect no matter

where or in what capacity the

executive is traveling. Amway pays

for the security services and the

travel expenses of the security

personnel.1

The committee that Mr. DeVos

chairs is not connected to Amway.

Nonetheless, the security officer

would, under Amway policy, have

to accompany Mr. DeVos on travel

required for his work with the

committee.

Commission statutes define a

contribution, in part, as any gift,

subscription, loan, advance or

deposit of money, or anything of

value given to influence any election for federal office. 2 U.S.C.

§431(8)(A). An expenditure is any

purchase, payment, distribution,

loan, advance, deposit or gift of

money, or anything of value made

by any person to influence any

election for federal office. 2 U.S.C.

§431(9)(A). The Act also states that

is unlawful for a corporation to

make contributions or expenditures

in connection with any federal

election. 2 U.S.C. §441b(b).

It does not appear that the

security service provided to Mr.

DeVos would enhance the

committee’s political activity or its

administration. Security officers will

be provided to Mr. DeVos in his

capacity as an Amway official, not

in his capacity as the chairman of

the committee. Thus, so long as

Amway security officers do not

perform services related to committee functions, Amway’s payment of

mandatory security services to Mr.

DeVos (including salary and travel

expenses of security personnel)

while he conducts committee

business would not constitute a

contribution or expenditure. Since

no contribution or expenditure

results, Amway’s payments to the

security officers would not be

impermissible under 2 U.S.C. §441b.

Date Issued: August 21, 1998;

Length: 3 pages. ✦

1 Amway executive officers are

required to travel by corporate plane

when such aircraft are available. This

AO does not offer an opinion on

whether providing travel services to

Mr. DeVos to travel on committee

business would be prohibited by 2

U.S.C. §441b.

Advisory Opinion Requests

AOR 1998-18

State party committee’s payment for

testing-the-waters poll for individual

who did not become a candidate.

(Washington State Democratic

Committee, September 4, 1998; 5

pages)

AOR 1998-19

Voluntary pre-authorized deductions

for collection of contributions to

trade association PAC from individual account holders in member

credit unions. (Credit Union National Association, Inc., Credit

Union Legislative Action Committee, Texas Credit Union League,

Pennsylvania Credit Union League,

San Antonio Telephone Federal

Credit Union and Patriot Federal

Credit Union, September 8, 1998; 8

pages plus 105-page attachment) ✦

Audits

(continued on page 6)

Audit Reports Made Public

The FEC has released 12 final

audit reports pursuant to 2 U.S.C.

§438(b) and 26 U.S.C. §9038(a)

since November 1997.

The first of these two provisions

of the Federal Election Campaign

Act authorizes the FEC to audit any

political committee that files reports

but fails to meet the threshold level

of compliance set by the agency.

The second provision authorizes the

FEC to audit Presidential committees that receive federal funds.

Presidential committees include

committees of primary election

candidates who receive federal

matching payments, committees

associated with the general election

nominee who receives federal funds

and committees involved in major

and minor party Presidential nominating conventions.

The Commission has the authority to initiate an enforcement matter

to pursue issues revealed by an

audit. The audited committees are

listed below.

Audits for Cause (2 U.S.C.

§438(b))

• Dennis Newinsky for Congress

(November 10, 1997)

• Joe Rogers for Congress Committee (December 1, 1997)

• Democratic Party of Illinois

(February 19, 1998)

• Bob Barr-Congress (February 27,

1998)

• Darrell Ealum for Congress (June

18, 1998)

Audits of 1996 Presidential

Committees (26 U.S.C. §9038(a))

• Perot ’96 (December 17, 1997)

• Alan Keyes for President ’96, Inc.;

Alan Keyes Committee; Other

Authorized Committees (January

15, 1998)
Federal Election Commission RECORD October 1998

6

Index

The first number in each citation

refers to the “number” (month) of

the 1998 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

1997-18: Status of committee as

local party committee, 1:14

1997-21: Refund to candidate who

had made contribution to own

campaign, 6:5

1997-22: Communicating membership corporation’s endorsements

of federal candidates to members

and their restricted classes, 1:14

1997-25: Affiliation of corporate

SSFs after reorganization, 3:5

1997-26: Establishment of

nonconnected PAC by individuals

affiliated with trade association, 3:7

1997-27: Use of campaign funds to

pay legal expenses, 4:7

1997-28: Reinstatement of terminated candidate committee to

retire debt to candidate, 4:8

1997-29: Status as state committee

of political party, 4:8

1998-1: Use of campaign funds to

pay legal expenses, 4:8

1998-2: Status as national committee of political party; status of

affiliated state parties as state

committees of political party, 4:10

1998-3: Status as state committee of

political party, 4:11

1998-4: Use of contributor lists

from FEC reports for marketing

“data mining” technologies, 6:5

1998-7: Exemption for party office

building fund and construction of

state party office facilities and

parking lot, 7:8

1998-8: Preemption of Iowa law

prohibiting corporate contributions to party building fund, 7:9

• Lugar for President Committee,

Inc.; Lugar for President Committee Legal and Accounting Compliance Fund; Lugar for President

Committee Audit Fund (May 29,

1998)

• 1996 Committee on Arrangements

for the Republican National

Convention (July 6, 1998)

• 1996 Democratic National Convention Committee (July 15, 1998)

• Chicago’s Committee ’96 (July 15,

1998)

• San Diego Host Committee/Sail to

Victory ’96 (July 31, 1998)

Final audit reports, each of which

includes an executive summary, are

available from the FEC’s Public

Records Office. Dial 800/424-9530

(press 3) or 202/694-1120. ✦

Audits

(continued from page 5)

1998-9: Generic party expenditures

made in connection with special

election, 7:9

1998-12: Status of employee

stockholders as part of restricted

class, 9:4

1998-14: Acceptance of contributions from residents of Pacific

Island nations covered under

Compact of Free Association,

10:4

1998-16: Corporate payment of

security for executive conducting

activity on behalf of

nonconnected committee, 10:5

Court Cases

FEC v. _____

– Al Salvi for Senate Committee,

4:4; 10:2

– California Democratic Party, 8:5

– Charles Woods for U.S. Senate, 3:3

– Freedom’s Heritage Forum, 10:2

– National Medical Political Action

Committee, 1:3; 7:5

– Williams, 1:3

_____ v. FEC

– Akins, 7:1

– Clifton, 4:5; 7:4

– DNC (97-676), 9:3

– DSCC (97-5160 and 97-5161),

6:4; 8:7

– Fulani, (97-1466), 8:6

– Gottlieb, 7:4

– Hollenbeck, 4:4; 9:4

– Judd, 6:5; 10:2

– Judicial Watch, Inc., 4:4; 9:3

– National Committee of the

Reform Party, 1:2; 4:4

– Natural Law Party (98-1025), 6:3

– Ohio Democratic Party (98-0991),

6:2; 8:5

– Perot ’96, Inc., (97-2554), 6:3

– Perot ’96, Inc., (98-1022), 6:3

– RNC (97-1552), 6:4

– RNC (98-1207 (WBB)), 6:1; 8:5

– Right to Life of Dutchess County,

Inc., 7:3; 9:3

– Stockman, 5:3

Federal Register

Federal Register notices are

available from the FEC’s Public

Records Office.

Notice 1998-13

Electronic Filing of Reports by

Publicly Financed Presidential

Primary and General Election

Candidates; Final Rule and

Transmittal of Regulations to

Congress (63 FR 45679, August

27, 1998)
October 1998 Federal Election Commission RECORD

7

Reports

Electronic filing, 2:2; 4:1; 4:2; 9:2

On FEC web site, 2:1; 4:2; 6:1; 9:2

Pre-Election Reporting Dates: 1998

Primary and Runoff Elections, 1:8

Reports, Alabama Runoff, 2:1

Reports due in 1998, 1:6; 1:11

Reports due in April, 4:2

Reports due in July, 7:11

Reports due in October, 10:1

Special Elections, California, 1:12;

3:9

Special Election, New Mexico, 5:3

Special Election, New York, 2:4

Special Election, Pennsylvania, 1:13

Do you want to file your FEC reports electronically? The FEC will

mail you a copy of its new, free electronic filing software—FECFile.

Mail or fax this form to the address/number below. Currently, FECFile

operates on Windows95 and WindowsNT platforms.

FEC Identification Number

Committee Name

Electronic Filing Contact Name

Address: Street 1

Address: Street 2

City

State

Zip Code

Phone Number

Fax Number

E-mail Address

Federal Election Commission

Data Division—Room 431

999 E Street, NW

Washington, DC 20463

Fax: 202/219-0674

✃

FECFile Order Form
FEDERAL ELECTION COMMISSION

999 E Street, NW

Washington, DC 20463

Official Business

Penalty for Private Use, $300

Bulk Rate Mail

Postage and Fees Paid

Federal Election Commission

Permit Number G-31

Printed on recycled paper

Federal Election Commission RECORD October 1998