December 1997 Federal Election Commission Volume 23, Number 12

Table of Contents

Statistics

1 Congressional Financing Heats Up

Regulations

1 FEC Seeks Comments on

Rulemaking Petition on “Express

Advocacy”

2 Federal Register Notice

3 Conferences

Audits

4 Audit Reports Made Public

Reports

4 FECFile Order Form

5 Advisory Opinions

Publications

6 New Brochures on Notices,

Partnerships

Court Cases

7 Condon v. USA

7 Index

FEC Seeks Comments on

Rulemaking Petition on

“Express Advocacy”

On October 31, the Commission

approved for public comment a

Notice of Availability that addresses

the definition of “express advocacy”

found in the Commission’s rules at

11 CFR 100.22. The notice responds

to a Petition for Rulemaking submitted by attorney James Bopp Jr. on

behalf of the James Madison Center

for Free Speech.

The petitioners urge the Commission to revise this definition to

conform with the decision in Maine

Right to Life Committee v. FEC.

1 In

that case, the U.S. District Court for

the District of Maine found that

paragraph 100.22(b) was invalid

because it expanded the definition

of the term beyond the Supreme

Court’s interpretation of it in

Buckley v. Valeo. The U.S. Court of

Appeals for the First Circuit upheld

the lower court ruling and, on

October 6, the U.S. Supreme Court

declined to hear the case.

The challenged paragraph defines

express advocacy as being a comStatistics Regulations

Congressional Financing

Heats Up

House Candidates

During the first six months of

1997 and more than a year before

the 1998 general election, House

incumbents reported $52.9 million

in receipts, up $7.4 million from the

comparable period for incumbents

in 1995. Republicans outpaced their

Democratic counterparts in

fundraising by nearly $9 million—

$30.8 million to $22.1 million. The

tallies are based on reports filed by

227 Republican incumbents and 207

Democrats.

The typical1 Republican incumbent reported receipts of $105,987,

but if that Republican incumbent

was a freshman, mid-year receipts

increased to $146,833. The same

figure for Democratic incumbents

was $72,726 and, for Democratic

freshmen, $115,228. Thirty-two

Republican freshmen and 42

Democratic freshmen were included

in these median figures.

Nonincumbents’ fundraising

lagged behind incumbents by a

substantial margin. Note, however,

that most nonincumbent candidates

1

 The typical figure reflects the median

of receipts reported by candidates.

(continued on page 2) 1 Maine Right to Life Committee v.

FEC, 914 F. Supp. 8 (D.Me. 1996),

aff’d, 98 F.3d 1 (1st Cir. 1996), cert.

denied 66 U.S.L.W. 3254 (1997).

(continued on page 3)
Federal Election Commission RECORD December 1997

2

Federal Election Commission

999 E Street, NW

Washington, DC 20463

800/424-9530

202/219-3420

202/501-3413 (FEC Faxline)

202/219-3336 (TDD for the

 hearing impaired)

800/877-8339 (FIRS)

John Warren McGarry,

Chairman

Joan D. Aikens, Vice Chairman

Lee Ann Elliott, Commissioner

Danny L. McDonald,

 Commissioner

Scott E. Thomas, Commissioner

John C. Surina, Staff Director

Lawrence M. Noble, General

 Counsel

Published by the Information

 Division

Louise D. Wides, Director

Angela Rucker, Editor

http://www.fec.gov

2 “Others” includes loans and gifts

from the candidate, party committee

contributions and transfers, and

interest.

Others

PACs

Individuals

Sources of Receipts of House Candidates During First Quarter of 1998

Election Cycle

Republican Incumbents Republican Nonincumbents Democratic Incumbents Democratic Nonincumbents

2

$30.8 million $1.7 million $22.1 million $2.6 million

decide to run for the House later in

the election cycle, with the result

that their financial activities are very

Statistics

(continued from page 1)

limited during this early phase.

During the first six months of 1997,

nonincumbents—both challengers

and candidates vying for open

seats—raised $4.3 million, with

Republicans bringing in $1.7

million and Democrats collecting

$2.6 million. At the time the reports

were filed, there were 39 Democrat

and 43 Republican nonincumbents.

The typical Democratic

nonincumbent raised $28,097 during

the first six months of 1997; typical

Republican nonincumbents raised

$26,879.

Senate Candidates

Candidates vying for 34 Senate

seats in 1998 raised $42.6 million,

according to the mid-year reports.

The 58 candidates who filed reports

with the Commission showed more

fundraising activity than did Senate

candidates in past elections. In

1991, with the same 34 contested

seats plus two special elections, 55

candidates reported raising $33.3

million in mid-year reports. In 1993,

50 Senate campaigns reported

collecting nearly $25 million in the

same report. And, in 1995, 49

candidates vying for Senate seats

raised $24 million during the first

six months of the year.

For a more detailed analysis of

mid-year receipts by congressional

candidates, including rankings and

lists of individual candidates, read

the FEC’s October 27 and 28 press

releases. Go to the FEC’s web site at

http://www.fec.gov; request a copy

from the Public Records Office at

800/424-9530 (press 3); or retrieve a

copy from the Faxline service at

202/501-3413 (request document

610). ✦

Federal Register

 Federal Register notices are

available from the FEC’s Public

Records Office.

Notice 1997-15

Rulemaking Petition: Definition

of “Express Advocacy”; Notice

of Availability (62 FR 60047,

November 6, 1997)
December 1997 Federal Election Commission RECORD

3

munication that, when taken as a

whole and with limited reference to

external events, can only be interpreted by a reasonable person as

expressly advocating the election or

defeat of a clearly identified candidate or group of candidates. It is

based in part on the U.S. Court of

Appeals for the Ninth Circuit’s

decision in Furgatch v. FEC, which

articulated this standard.

The petitioners take a different

view, arguing that the “express

advocacy” standard requires words

specifically calling for the election

or defeat of a named candidate.

The “express advocacy” standard

is important because, among other

things, it determines whether certain

communications are covered by the

Federal Election Campaign Act, and

which communications require a

disclaimer. The Notice of Availability seeks comments on whether the

FEC should initiate a rulemaking in

response to the petition. The Commission routinely provides an

opportunity for comments on

rulemaking petitions before the

agency considers the merits of the

petition.

The petition and notice are

available from the Public Records

Office at 800/424-9530 (press 3);

through the FEC’s Faxline at 202/

501-3413 (request document 232);

and at the FEC’s web site—http://

www.fec.gov. The notice is published in the November 6 Federal

Register (62 FR 60047).

Public 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 at

202/219-3923, with a copy mailed

to the preceding address to ensure

legibility. Comments also may be

sent by e-mail to

expressad@fec.gov. Electronic

submissions must include the

commenter’s full name, e-mail

address and postal mail address. The

deadline for comments is December 8. ✦

3 “Nonincumbents” includes challengers and candidates running in openseat elections.

FEC Conference

Schedule

 The FEC will hold one more

conference this year and three

more in 1998. To register for

any of the scheduled

conferences, call Sylvester

Management at 1/800-246-7277

or send an e-mail message to:

TSYLVESTER@WORLDNET.ATT.NET.

Washington, DC

For trade associations and

membership organizations

Date: December 11-12, 1997

Location: Hyatt Regency Capitol

Hill

Registration: $180

Hotel rate: $145

Washington, DC

For candidate committees

Date: February 23, 1998

Location: Madison Hotel

Registration: $175

Hotel rate: $124

Denver

For candidates, political parties

and corporate and labor

organizations

Date: March 25-27, 1998

Location: Westin Tabor Center

Registration: $180

Hotel rate: $136

 Read future issues of the Record

to get scheduling information for

the following conference slated

for 1998:

Washington, DC

For nonconnected committees

April 1998

Regulations

(continued from page 1)

Democrats

House Incumbents:

Median Receipts of 1st

Quarter of Election

Cycle

(In Thousands)

$0

$20

$40

$60

$80

$100

$120

1993 1995 1997

Republicans

Democrats

(In Thousands)

House Nonincumbents3:

Median Receipts of 1st

Quarter of Election

Cycle

$0

$5

$10

$15

$20

$25

$30

1993 1995 1997

Republicans
Federal Election Commission RECORD December 1997

4

Audits

Audit Reports Made Public

Thus far this year, the FEC has

issued 10 final audit reports pursuant to 2 U.S.C. §438(b) and 26

U.S.C. §9038(a). 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 committees1

that receive federal funds.

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

• Mississippi Democratic Party

Political Action Committee

(January 24)

• New Hampshire Democratic State

Committee (March 27)

• New Jersey Democratic State

Committee (July 8)

• Democratic, Republican, Independent Voter Education (DRIVE)

(September 25)

• Kevin Quigley for Congress

(October 21)

Audits of 1996 Presidential

Committees

• Arlen Specter ’96 (June 30)

• Alexander for President, Inc.;

Alexander for President Compliance Committee, Inc.; Alexander

Audit Fund, Inc. (July 8)

• Phil Gramm for President, Inc.;

Phil Gramm for President Compliance Committee, Inc.; Phil Gramm

for President Audit Fund (July 10)

• Committee to Reverse the Accelerating Global Economic and

Strategic Crisis: A LaRouche

Exploratory Committee (July 25)

• Pete Wilson for President Committee, Inc.; Pete Wilson for President

Compliance Committee, Inc.; Pete

Wilson for President Audit Fines

and Penalties Account, Inc.

(September 5)

The New Jersey committee audit

covers financial activity during the

1992 election cycle; the Mississippi,

New Hampshire and DRIVE

committees’ audits cover financial

activities during the 1994 election

cycle; and the Quigley committee

audit covers financial activity during

the 1996 election cycle. 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 202/219-4140. Executive summaries for the five 1996 presidential

primary campaign audits also are

available at the FEC’s web site—

http://www.fec.gov. ✦

1

 Presidential committees include

committees of primary election candidates who receive federal matching

payments, committees associated with

the nominee in the general election who

receive federal funds and committees

involved in the Democratic and

Republican Presidential nominating

conventions.

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
December 1997 Federal Election Commission RECORD

5

Advisory

Opinions

AO 1997-20

Contributions by Nonfederal

Committee

Friends of McCarthy, a California

nonfederal committee, may use its

leftover funds to make contributions

to federal candidates so long as

those funds are from federally

permissible sources and the committee follows one of two options

allowed by the Commission.

The Committee qualified as a

state committee under California

law in 1989, and former Lt. Gov.

Leo T. McCarthy used it in 1990 for

his reelection campaign. In 1997,

the Committee was in the process of

terminating, and wanted to use its

remaining funds to contribute to

federal candidates. Those funds

were part of $6,800 in media

refunds the Committee had received

between 1995 and 1997 after a

number of years of court action. The

refunds constituted the Committee’s

most recent receipts.

In May 1997, the Committee had

$3,500 in cash on hand. A month

later, it contributed $2,000 to Nancy

Pelosi for Congress, a federal

committee. A short time later, the

Committee filed a statement of

organization with the FEC, registering as a political committee. It also

filed a mid-year report disclosing

the contribution to Ms. Pelosi’s

committee, as well as the most

recent media refund and general

operating expenses.

By virtue of its $2,000 contribution to a federal candidate, the

Committee qualified as a political

committee under the Federal

Election Campaign Act (the Act). 2

U.S.C. §431(4). Commission

regulations dictate what a political

committee must do if it has cash on

hand at the time of registration. 11

CFR 104.12. However, the situation

the Committee presents is unique:

the Committee had no receipts other

than the media refunds during the

last three years; those media refunds

constituted a return of funds that

were originally donated to the

nonfederal committee, and the

Committee had sought such refunds

through legal action begun more

than five years ago; the Committee

plans to raise no more funds; and

the Committee will terminate its

activities as soon as it disposes of its

cash on hand.

A political committee’s cash on

hand must be reported on its first

report. 2 U.S.C. §434(b); AO 1990-

16. To determine the amount of

permissible cash on hand at the time

the Committee made the contribution

to the Pelosi campaign, it may use

the traditional method for identifying

its cash on hand (Option A) or an

alternative method (Option B).

• Option A. Commission regulations

state that cash on hand is presumed

to comprise those contributions

most recently received by a

committee. 11 CFR 104.12. In this

case, its treasurer must first

identify the sources of the $3,500

in contributions most recently

received by the Committee prior to

the receipt of the media refunds.

Then, it must subtract any funds

that would be impermissible under

federal law. The remaining amount

is the permissible cash on hand in

its new status as a federal political

committee. The impermissible

donations should have been transferred out of the Committee’s

account within 10 days of the

contribution to the Pelosi committee.

 Those persons whose contributions constituted the Committee’s

cash on hand at the time it registered with the FEC should be

notified that their contributions are

subject to the limitations and

prohibitions of the Act. 11 CFR

102.5(a)(2); AO 1990-16. If the

notification is not given for such

contributions, such funds must be

subtracted from the cash on hand

total and transferred out of the

Committee’s federal account.

• Option B. The Committee may use

the media refunds in determining

whether the $3,500 cash on hand

consisted of federally permissible

contributions. Under this option,

the cash on hand would be considered as originating from the

contributions that were used to

make the media disbursements,

which were subsequently refunded.

The determination of permissible

funds within the $3,500 is based

on the ratio of permissible donations to total donations comprising

the cash on hand at the time of the

relevant media disbursements.

See the advisory opinion for more

detailed information about each

option. The opinion is available

from the Public Records Office

(800/424-9530, press 3) and from

the FEC’s Faxline service (202/501-

3413, document 9720).

Amended Reports and

Termination

Under both options, if permissible funds total less than the

amount contributed to the Pelosi

campaign, then the Committee must

ask the Pelosi campaign for a refund

of the impermissible amount. (The

Pelosi campaign must make the

refund within 30 days of being

informed by the Committee.) The

Committee must also cease making

further federal contributions. On the

other hand, if there are remaining

permissible funds, the Committee

may contribute them to federal

campaigns.

The Committee must also file an

amended mid-year report within 30

days of this advisory opinion. If the

Committee does not dispose of its

remaining permissible funds within

30 days of receiving this advisory

opinion, it must, by that date,

transfer the impermissible funds in

its account to a separate bank

account that may not be used for

federal elections.

Date Issued: October 22, 1997;

Length: 6 pages. ✦

(Advisory Opinions continued on page 6)
Federal Election Commission RECORD December 1997

6

Publications

New Brochures on Notices,

Partnerships

The FEC has just published two

new brochures. Special Notices on

Political Ads and Solicitations

explains the various types of notices

that must appear on political communications. The brochure summarizes the rules for disclaimers, “best

efforts” and Internal Revenue

Service notices. This brochure

clarifies when such notices are

required and explains the rules for

Advisory Opinion Requests

Advisory opinion requests are

available for review and comment in

the Public Records Office.

AOR 1997-24

Conversion of SSF to nonconnected

PAC after dissolution of parent

corporation (Corporation for the

Advancement of Psychiatry Political

Action Committee, October 21,

1997; 2 pages) ✦

Alternative Disposition of

Advisory Opinion Request

AOR 1997-23

The requester withdrew this request

for an advisory opinion. The request, submitted on October 14,

sought the Commission’s opinion on

the use of a discounted airline ticket

by a federal candidate. ✦

Request for Reconsideration

of Advisory Opinion

AO 1997-21

The requester has asked the Commission to reconsider this advisory

opinion. The opinion, issued on

October 2, concluded that the

Firebaugh for Congress Committee

could use an unexpected vendor

refund only to repay a reported loan

its candidate had made, but it could

not reimburse her for the money she

had donated to her campaign. The

candidate had provided funds to the

committee after the election to retire

its unpaid bank loan and other debts.

See page 8 of the November 1997

Record. ✦

Advisory Opinions

(continued from page 5)

the wording and placement of

notices on political ads and solicitations.

Partnerships describes the special

rules that apply to partners and

partnerships involved in federal

election activity. The brochure

covers a number of topics, including

dual attribution of partnership

contributions, prohibited partnership

contributions, PACs sponsored by

partnerships and partner activity on

behalf of federal candidates.

Use the form below to order

brochures. The brochures are also

available at the FEC’s web site—

http://www.fec.gov. ✦

✃

Brochure Order Form

Special Notices on Political Ads and Solicitations

No. of Copies

Partnerships

No. of Copies

Name

Organization

Address

City State Zip Code

Send your order to: Federal Election Commission

Information Division

999 E Street, NW

Washington, DC 20463
December 1997 Federal Election Commission RECORD

7

Court Cases

Condon v. USA

On March 26, 1996, the parties in

this case agreed to a voluntary

dismissal by the U.S. Court of

Appeals for the Fourth Circuit. The

plaintiff in the case, South Carolina

Attorney General Charles Condon,

had asked the court to declare that

the National Voter Registration Act

(NVRA) was an unfunded federal

mandate that was unconstitutional.

The FEC was named in this suit as a

one of the defendants.

Mr. Condon had alleged that the

NVRA violated the Tenth Amendment, which states that powers not

delegated to the federal government

and not prohibited to the state by the

Constitution are reserved to the

states.

U.S. Court of Appeals for the

Fourth Circuit, 95-192. ✦

Index

The first number in each citation

refers to the “number” (month) of

the 1997 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

1996-35: Status of Green Party as

national committee, 1:10

1996-42: SSF disaffiliation following corporate spin off, 1:11

1996-45: Use of campaign funds,

1:12

1996-46: Continuation of exemption

from select FECA reporting

provisions, 4:7

1996-48: Application of “news

story” exemption, 2:5

1996-49: Affiliation between PAC

of joint venture partnership and

SSF of corporate partner, 3:7

1996-50: Disaffiliation of SSFs, 3:9

1996-51: Qualification as state

committee of political party, 3: 9

1996-52: Resolicitation of excess

campaign funds for nonfederal

campaign, 3:10

1997-1: Use of excess campaign

funds to establish foundation, 5:8

1997-2: Use of campaign funds for

congressional retreat fees, travel,

5:8

1997-3: Qualification as state

committee of political party, 6:11

1997-4: Application of contribution

limit to limited liability company,

6:12

1997-5: Qualification of lessee of

trading “seat” on Exchange as

member, 7:6

1997-6: Reinvestment by political

committee of investment income,

8:8

1997-7: Status as state committee of

political party, 8:9

1997-9: Collection of PAC contributions from individual members

through electronic debiting of

their trading accounts held with

member firms, 9:4

1997-10: Transfers between campaign committees of different

election cycles, 10:5

1997-11: Use of campaign funds,

9:5

1997-12: Use of campaign funds,

10:5

1997-13: Relationship of limited

liability company’s nonconnected

PAC to parent corporations’

SSFs, 10:6

1997-14: Use of corporate contributions to build party headquarters,

10:8

1997-15: Establishment of

nonconnected PAC by incorporated membership organization’s

CEO, 11:4

1997-16: Methods of providing

PAC endorsements of federal

candidates to restricted class, 11:5

1997-17: Contribution limit of

limited liability company, 11:6

1997-19: Donations by corporation

and foundation to potential host

committee of presidential convention, 11:7

1997-20: Permissibility of contributions by nonfederal campaign

committee to federal candidates,

12:5

1997-21: Refund to candidate who

had made contribution to own

campaign, 11:8

Court Cases

FEC v. _____

– California Democratic Party, 7:5

– Charles Woods for U.S. Senate,

4:6

– Christian Action Network, 1:5;

5:5; 8:4

– Christian Coalition, 7:2

– DSCC (95-2881), 3:2; 8:3

– Fund For a Conservative Majority,

1:5; 11:1

– Kalogianis, 5:3

– Legi-Tech, 7:4

– McCallum, 2:4

– Orton, 6:6

– Parisi, 1:4

– Public Citizen, 4:6

– Williams, 2:3; 7:5; 11:2

_____ v. FEC

– Akins, 2:1; 7:5

– Bush-Quayle ‘92 Primary Committee, 3:5

– Clark, 5:1

– Clifton, 8:1

– Common Cause (96-5160), 5:4

– Condon, 12:7

– DCCC (96-0764), 1:4

– DNC (96-2506), 1:5; 5:5

– DNC (97-676), 6:7

– DSCC (96-2184), 1:2; 8:3

– Fulani (97-1466), 10:2

– Gottlieb, 7:5

– Hagelin, 6:7

– Hooker, 1:5

– Jones, 6:7

– Maine Right to Life, 11:2

– Minnesota Citizens Concerned for

Life, 7:2; 8:4

– NRCC (96-2295), 1:2

– Reilly, 1:4

– Right to Life of Dutchess Co.,

Inc., 6:8

(continued on back page)
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 December 1997

– RNC (94-5248), 2:5

– RNC (97-1552), 9:1

– White, 10:2

Other Court Cases

– DSCC v. NRSC, 10:1

Reports

Electronic Filing, 2:1; 5:9; 7:10;

10:1; 12:4

July Reporting Reminder, 7:1

Schedule for 1997, 1:6

Special Election, New Mexico, 4:3

Special Election, New York, 10:12

Special Election, Texas, 3:6; 4:3

800 Line

Amended reports, 4:2

Debt settlement and committee

termination, 1:8

Index

(continued from page 7) Change of Address

Political Committees

 Treasurers of registered political committees automatically receive the

Record. A change of address by a political committee (or any change to

information disclosed on the Statement of Organization) must, by law, be

made in writing on FEC Form 1 or by letter. The treasurer must sign the

amendment and file it with the Secretary of the Senate or the FEC (as

appropriate) and with the appropriate state office.

Other Subscribers

 Record subscribers who are not registered political committees should

include the following information when requesting a change of address:

• Subscription number (located on the upper left corner of the mailing label);

• Subscriber’s name;

• Old address; and

• New address.

 Subscribers (other than political committees) may correct their addresses by

phone as well as by mail.