999 E Street NW Washington DC 20463 Volume 17, Number3

11 INDEX

11 cctn'LIANCE: MURs Released to the Public

<nJRl' CASES10 FEC v. Dramesi for Congress Committee10 FEC v. west Virginia Republican State

Executive Committee10 FEe v. Speelman10 New Litigation

7 I\IJYISORY OPlNIOOS

J7 S'I:ATISTICS: Semiannual PAC Count

6 SPECIAL ELEX:TIrn: Massachusetts

REPORTS5 1991 Reporting Reminder5 Letter to State, Election Officials on

Allocating Reporting Rules

5~: For Candidates and PACs

PUBLIC FUNDIR;1 FEe Comments on IRS Rules2 Focus Groups Discuss Tax Checkoff

Tl'tBLE OF CDn'ENl'S

the primary Account. Future checkoffdollars would also be transferred from theFund to the primary Account. (The transferof addi tional funds into the Primary Ac­count could take place only through septem­ber 30 of the year following the Presiden­tial election; checkoff dollars depositedinto the Fund after that date would have tobe reserved for the next Presidentialelection. )

If a shortfall were to occur--i.e., ifthe amount of matching funds certified bythe Commission in one month exceeded thetotal dollars in the Primary Account as ofthe last day of that month-the amount paidto each candidate would be reduced. Thecandidate would receive a payment based onhis or her pro rata share of the total

(continued on p. 4)

FEDERAL ELECTION COMMISSION

March 1991

Treasury proposal: Full Set-AsideThe Treasury Department proposes a

payment system under which the projectedamount needed to pay for the conventionsand the general election would be set asideby January 1 of the Presidential electionyear. The remaining amount in the F'Und­and additional monthly deposits of checkoffdollars-would then be used for matchingpayments to primary candidates.

Specificqlly, under the proposed rules,the secretary of the Treasury would setaside funds for the conventions and generalelection by transferring moneys from thePresidential Election Campaign Fund to aNominating convention Account (first prior­ty) and to a General Election Account (sec­ond priority). The Treasury, in consul­tation with the FEC, would determine theestimated amount needed for these twoaccounts.

The dollars remaining in the Fund afterthe full set-aside would be deposited into

-~ T-~ ~ _I. __ • ~ _ • ~~.~~-~ .... ( -F~~ .~:. ~-~,~ ~~\-~~ .. ~-~~ ~~ " AT~~~

/ • h • L"t

-. _ . I :'1 .: &~~·~~::~,c~~ .. ~~::"/.~.~-~~~" ~~~" . - ~~~ / -- ~ ~

/ • < ~ ~ ~''''' •• / ...... :

_" ~ 1- _ _ __ _ _ _ ~.......... ,- __ ._~_ ~ .~~ _~•• ~~~. ~

FEe~ rn 'I'RFASURY RULESCCNC:ERNIN3 PUBLIC FUNDIOO PAYMmTS

In written comments and oral testimony,the commission responded to a Notice ofproposed Rulemaking on the financing ofPresidential elections published by theDepartment of Treasury, Internal RevenueService (55 FR 51303, December 13, 1990).The proposed rules explain how the TreasuryDepartment would handle payments f rom thePresidential Election Campaign Fund in theevent of a shortfall of checkoff dollars inthe Fund. The Commission submitted itswritten comments on January 22, 1991.Following up on this I Chai rman John WanenMcGarry testified at an IRS hearing held onFebruary 1l.

Under the checkoff law, funding for theconventions and the general election nomd­nees has priority over funding for primarycandid~tes. The Commission anticipatesthat a shortage of public funds for the1992 Presidential election will jeopardizethe funding of ,primary campaigns.

•

Federal Election CaIIIlission, 999 E Street, Mi, washington, IX: 20463800/424-9530 202/376-3120 202/376-3136 (TOO)

FEDERAL ELECTION COMMISSION

•

Volume 17, Number 3

Election Campaign Fund, the general publicis not making an informed choice. Althoughthe report noted that creating an informedpopulace may not alter existing patterns ofparticipation in the dollar checkoff, thereport did recommend a public educationprogram that would address three keypoints:o The purpose of the Presidential public

funding program;o How much money is collected and spent on

the program; ando How the public funds are allocated and

spent.To this end, the COl1U'llission plans to

conduct a broadcast media program in Marchand April to educate the public. The agen­cy has also developed written materials: ahandout for tax preparers and taxpayers(see next page) and a new brochure explain­ing the dollar checkoff and how the publicfundi nq proqram works. Both i terns areavailable free from the FEC's InformationServices Division (800/424-9530; 202/376­3120) .

Copies of the ~eport are available fromthe Public Records Office. To order thereport, call 800/424-9530 and ask for Pub­lic Records, or dial the office directly:202/376-3140.

walter J. stewart, Secretary of the Senate,Ex Officio Commdssioner

Donnald K. Anderson, Clerk of the House ofRepresentatives, Ex Officio Commissioner

2

John warren McGarry, Chai rmanJoan D. Aikens, Vice ChairmanLee Ann ElliottThomas J. JosefiakDanny L. MCDonaldScott E. 'Ibcmas

March 1991

FOCUS GIOJPS DISCUSS 'mK atECROFFOn January 4, 1991, the commission

received a report on the general public'sawareness of the dollar tax checkoff on IRSforms and how the checkoff relates to thePresidential public funding system. Thecontractor, Market Decisions Corporation ofportland, Oregon, prepared the report afterholding focus groups in three cities du~ing

November and December 1990: Portland,Oregon; Fort Lee, New Jersey; and Chatta­nooga, Tennessee. Two focus groups met ineach city: one composed of indviduals whochecked "yes" to the dollar checkoff ontheir last tax return, the other consistingof individuals who checked "no." Eachgroup comprised from seven to eleven menand women representing an assortment ofdemographic characteristics. The groupsessions were designed to collect data onthe participants' understanding of Presi­dential public funding, their attitudetowards the public fundi.nq program and why,as individuals, they checked yes or no.

The report concIuded that the publicfunding program is obscure--most citizensdon't understand why it was implemented andhow it works. When making the decision tocontribute-or not to contribute-onedollar of their taxes to the Presidential

I 0J,t1l No. \54S-0014

For Prlw.c;r AelandP.perwork ReductionAct Notice, "I1nllrud10nIi-

Volume 17, Number 3

~~~)

• In 1988 the Democratic and HepublicanPresidential nominees each received $46.1million; 15 primary candidates roceiveda total of $67.5 million, and each conven­tion received $9.2 million.

• Presidential candidates use the checkoffdollars to pay for t.v. ads. campaign staff,campaign travel, fundraising and othercampaign expenses, but not personalexpenses.

• None of the money is used for Senate orHouse elections.

• After the election, the Commission auditsevery campaign that received federalfunds, and any surplus or improperly usedtccoral funds must be repaid to the Fund.

• Taxpayers check off about $33 millionannually

Help taxpayers exercise their choice byshari ng these facts _For more information,write the Federal Election Commission,999 E Street NW, WaShington, DC 20463.

l,ul name

il®90 1(1)

3

o to Chis lund? .

FEDERAL ELECTION COMMISSION

lA' ),<I1i~ii~,-?)~~,The Taxpayer's Choice

It 310'''' It-rUin, ~pou~·s h/1;t n3m~.anl,j Inll ....t

u.s. Individual Income Tax ReturnFQrrl'l., eer Jan. - Dec.1 I I 1990. Qf otn tUn iI r "11"1

"(cur h'~1 (J.am~ 'n<lIr1lt~1

~I •. , •

Many taxpayers overlook the tax checkoffline. That line asks taxpayers to make achoice, to indicate whether they want $1 oftheir taxes to be set aside for the PresidentialElection Campaign Fund. To help taxpayersexercise that choice, here are the essentialfacts:

• The dollar checkoff does not increase thetaxes an individual owes.

• Checkoff dollars go directly to qualifiedPresidential candidates (regardless ofparty) to fund their primary and generalelection campaigns. The Republican andDemocratic nominating conventions arealso funded.

• The purpose of using federal dollars tofund Presidential campaigns is to reducecandidates' dependence on large contri­butions from individuals and groups andto place candidates on an equal financialfooting in the general election.

label(See lIrlSlfUCl,on~ A

o~~a~ II.) DE

use IRS label.,

at~erwlse. Mplease prmt E

"or type. E

~ 1040

March 1991

Copies of this handout are available free of charge from the COIlU'llission. Additionally, ifyour organization would like to print large quantities of the handout, camera-ready copy isavailable at no charge. Call 800/424-9530 or 202/376-3120.

FEDERAl ELECTION COMMISSIONMarch 1991

(continued from p, 1)amount certified for that month. Forexample, if, in a given month, certifica­tions totaled $1,000,000 (two candidates,$500,000 each) and only $200,000 was avail­able for payment, each candidate would bepaid $100,000, based on the followingcalculation:

$ 500,000$1,000,000 x $200,000 = $100,000

The difference between the amount certifiedand the amount actually paid to the candi­date would be carried over to the nextmonth and considered with other certifica­tions for payment that month.

COJIIIission's Coaments and Testimoney

Treasury's Full Set-Aside. The COlTl'l'lis­sian disagreed with the Treasury proposalto set aside--before making any payments toprimary candidates--100 percent of theestimated funds needed to cover payments tothe conventions and general election nomi­nees. Under this proposal, primary candi­dates might not receive significant amountsof their entitlements until after the cru­cial early primaries. The delay and uncer~

tainty might make it difficult for candi­dates to obtain campaign loans. Moreover,because candidates would receive only afraction of their entitlement at the mostcritical period of the campaign, the fullset-aside system would distort the campaignprocess and might even induce some primarycandidates to decline public fundingentirely.

f'EC'S Partial set-Aside. The Conunis­sion recommended that the Treasury considera method that would take into accountanticipated receipts to the Fund. In theCommission's view, the public fundingstatutes allow the Secretary to considerreasonable estimates of future receipts tothe Fun~ When calculating the set-asideamount. The statute provides that thePrimary Account contain "the amount avail­able after the Secretary determines thatamounts for [convention and general elec­tion) payments ... are available for suchpayments." 26 U.S.C. §9037(a). The Com­mission interprets "available" to mean

1Thi s position is consistent with thattaken by Treasury and the Commission withrespect to the 1976 election cycle, when aless severe shortfall was projected. Seepage 13 of FEC Agenda Document #91-04.

4

Volume 17, Number3

available when the funds are needed to makepayments to the convention c~nunittees and •general election candidates. This "par-tial set~aside" approach would, in effect,increase by about $28 million the pool offunds available for the Primary Accountduring the eacly months of the electionyear. This $28 million represents esti-mated checkoff deposits expected duringJanuary through July 1992 (prior to anygeneral election payouts).

The Commission reoammended a systemunder Which primary candidates wouldreceive a predetermined percentage of theircertifications each month. The agency'smost recent estimates indicate that, underthis system, primary candidates would beable to receive as much as 95 percent oftheir monthly entitlements in the earlymonths of 1992. This approach would:o Provide maximum funds at the most criti­

cal period in the campaign;o Create some certainty in the amount of

matching funds primary candidates couldexpect and thereby make it easier forcandidates to obtain campaign loans; and

o Ensure an equitable distribution of fundsamong the candidates.

In summary, the Commission urged Treas-ury to consider a system that takes into ..account an estimate of anticipated receipts ....from the 1992 checkoff and to adopt apayment system least disruptive to thepublic financing of primary campaigns.

2The Commission's most recent projectionsindicate that the 1992 payments to conven-tion committees and general election candi-dates will total $112.24 million. under afull set-aside, this would leave only $14.5million to pay primary candidates on Janu­ary 2, 1992. The Commission estimates thatJanuary certifications for matching fundswill equal $20 to $25 million, depending onthe payment schedule used (once a month ormore frequently).

Volume 17, Number 3

1991 REPORTIOO REm~ER

PACs, party committees and House andSenate candidate committees that filed on aquarterly basis in 1990 now file on a semi­annual basis. The next report thesecommittees must file is the July 31 semi­annual report (covering January throughJune 1991). Committees filing semiannuallydo not file an April 15 quarterly report.

PACs and party committees that filed ona monthly basis in 1990 must continue tofile on that basis unless they notify thecommission, in writing f that they wish tochange to semiarmual filing in 1991.11 era 104.5(c).

Presidential candidate committees havethe option of filing quarterly or monthlyreports during 1991. If they wish tochange their current filing frequency,however, they should notify the Commission.

For complete information on reporting,including 1991 deadlines, see the January1991 Record.

FEe LETI'ER ro STATE OFFICERS rnALLOCATlOO REPORTI~ RULES

In early february, the Commission senta letter to Secretaries of State (or equi­valent state officers) to notify them thatnew federal regulations on allocation mayaffect the content of state disclosurereports. Under the allocation rules, whichbecame effective on January 1, 1991, poli­tical committees with federal and nonfeder­al accounts must use the federal account topay for joint federal/nonfederal transac­tions. The nonfederal account transfersits portion of a payment for a joint ex­pense to the federal account r the federalaccount reports the receipt of the transferand the ultimate disbursement of funds tothe vendor. In light of these new regula­tions, the Commission pointed out thatstate officials may wish to consider wheth­er the nonfederal account's report, merelyshowing a transfer to the federal accountfor a joint expense instead of showing apayment to the vendor. will satisfy statedisclosure requirements.

5

FEDERAL ELECTION COMMISSIONMarch 1991

Conference for candidate CcmnitteesWashington, DC, April 19Bobby werfel, Chief, Information Services

This one-day conference will focus onwinding down the 1990 campaign and gearingup for the 1992 elections.

PUBLIC APPFARANCES

3;22 Association of state DemocraticChairs

Washington, DCChairman John Warren McGarryLouise D. Wides, Assistant

Staff Director, InformationServices

Bobby Werfel, Chief, InformationServices

Allocation Training for party cOJIIIlitteesColumbus, Ohio, March 19-20Janet Hess

This training is recomnended for stateand local party committees that are locatedin Ohio and surrounding states and thatconduct both federal and nonfederalactivity.

Conference for PACsWashington, DC, MayBobby Werfel

This one-and-one-half-day conferencewill cover the campaign finance law'srequirements for corporations, labor organ­izations, membership groups and theirrespective PACs. The new allocation ruleswill also be discussed. The conferencedate will be announced in a future Record.

aNDID!\TE AND PAC cawERENCES;ALUX:ATIa-l TRAlNlllXi

The cornrodssion is planning the foll~

ing conferences as well as an allocationtraining. For more information, call theInformation Services Division, 800/424-9530or 202/376-3120, and ask for the contactperson listed below.

•

COfIUTl'EES 'llIAT SUPPORT CANDIM.TES IN 'IHESPECIAL PRIMARY <H.Y (APRIL 30)

•

4/185/237/57/31

4/187/31

----~~-------

4;155/207/57;31

RegjCertl1ail~ng FilingDate Date

4/157/31

Reg/Certl1ail~ng FilingDate Date

Volume 17, Number 3

Pedod 1Covered

Period 1Covered

1;1-4;104/11-5/155/16-6;246/25-6/30

1/1-4/104/11-6/30

reporting requirement, see 11 CFR 104.4(b)and 104.5(g).

axvu:TJ'EES '!HAT SUPPORT CANDIIlA.TE.'5 IN BO'IHTHE SPECIAL PRIMARY (APRIL 30) AND mESPECIAL GmERAL (JUNE 4)

Report

Report

l I f the pre-primary report is the firstreport filed by the committee, the reportmust disclose all activity that Dccurredbefore the committee registered and beforethe individual became a candidate.

2Reports sent by registered or'certifiedmail rust be postmarked by the mailingdate. Otherwise, they must be received bythe filing date.

Pre-primarypre-generalPDst-generalMid-year

Pre-primarynid-year

State FilingIn addition to filing with the appro­

priate federal office--the Clerk of theHouse Dr the FEC--CDmmittees filing Massa­chusetts special election reports mustsimultaneously file copies Df reports withthe Massachusetts state office: Divisionof Public Records, Office of the SecretaryDf state, one AshburtDn Place, Room 1719,Boston, MA 02108.

Authorized committees of candidatesmust file the entire report; other commi.b­tees must file only the portion of thereport that is applicable to the candidate(for example, the FDrm sx Swmtary page andany schedules that disclose contributionsor expenditures on behalf of the candi­date). 2 U.S.C. §439(a); 11 CFR 108.3.

6

FEDERAL ELECTION COMMISSIONMarch 1991

Author i zed CoJlIni.tteesAuthorized co~ttees of candidates

running in the special elections must filereports according to the schedule given inthe tables below. All candidates known tobe on the ballot are automatically sent FECreporting forms.

Note that an authorized committee mustfile notices Dn cDntributions Df $1,000 ormore received after the close of books fora pre-election report but more than 48hours before the election. The notice mustreach the appropriate federal and statefiling offices within 48 hours after thecommittee's receipt of the contribution.For information on the content of thenotice, see 11 CFR 104.5(£).

PACs and party COdIDittees

semiannual Filers. PACs and partycommittees that report on a semiannualbasis during 1991 may have to f~le pre- andpost-election reports if the committeemakes contributions or expenditures inconnection with a special election duringthe coverage dates shown in the tables.11 eFR 104.5(h).

PAC Reports on Independent Expendi­tures. Any PAC (including a monthly filer)that makes independent expendi tures inconnection with a special election may haveto file a 24-hour report. This reportingrequirement is triggered when a committeemakes independent expenditures aggregating$1,000 or more between 2 and 20 days beforean electiDn. The report must be filed withthe appropriate federal and state filingDffices within 24 hours after the expendi­ture is made. FDr more information on this

Monthly Filers. PACs and party commi t­tees that file mDnthly during 1991 do nothave to file pre- and post-electionreports, but PACs may have to file 24-hourreports on independent expenditures, asexplained belD......

nASSAOlUSETl'S SPECIAL ELEC'I'ICfiSMassachusetts will hold special elec­

tions in the 1st Congressional District tofill the seat held by the late CongressmanSilvio Conte. The special primary electionwill be held April 30, and the generalelection, June 4. Reporting information isgiven below.

Volume 17, Number 3

sale of campaign Assetunder the following circumstances,

described by the Smith Committee, the pro­(continued)

AL'I'ERNATE DISPOSITIOO OFADVISORY OPINICN~

AOR 1990-28: Te1phone service Bureau'sProvision of 90o-1ine Servicesto candidates and PoliticalCOIIIlittees

On January 31, 1991, the commi.ss ion failedto approve a draft advisory opinion by therequired four votes. The vote was 2-2,with Commissioners Aikens and Thomasrecusing themselves. (See Agenda Documents90-0B and 91-0B-A.)

ADVISORY OPINI<E SUl9fARIES

NJ 1990-26: sale of campaign Asset;Personal Use of Excess FundsAfter November 30, 1989

The Committee to Be-Elect Virginia Smith toCongress, the 1988 principal campaigncommittee of a ngrandfatheredn Member ofCongress, now retired, may sell the commit­tee's computer without a cont r i butionresulting, as long as the price does notexceed the usual and normal charge. Thecommittee may follow one of two methods todetermine its cash-on~hand balance as ofNovember 30, 1989--i.e .• the maximum amountthat may be converted to the formerMember's personal use--and to determinewhether the proceeds from the sale of thecomputer may be converted to personal use.

1\OR 1991-1Employees' advance authorization forperiodic credit card contributions to part­nership PAC. (Date Made Public: January24, 1991; Length: 17 pages)

l\OR 1991-2Disposition of possibly illegal contribu­tions rai5ed through 900-1ine services.(Date Made Public: February 5, 1991;Length: 16 pages plus attachments)

ADVISORY OPINIOO RQJESTSRecent requests for advisory opinions

(AORS) are listed below. The full text ofeach AOR is available for review and com­ment in the FEC's Public Records Office.

7

FEDERAL ELECTION COMrvllSSJON

SEMIANNUlU. PAC COONTAt the close of 1990, the number of

political action committees (PACs} regis­tered with the FEC dropped to 4,172, adecrease of 21 PACs since the last semi­annual survey (July 1990). The category ofnonconnected PACs lost the most PACs--53-­while the number of trade/membership/healthPACs increased by 21, as shown in the tablebelow. For statistics of semianual PACcounts taken since 1975, order the FEepress release of January 11, 1991 (800/424­9530 or 202/376-3140).

March 1991

l"Other" category consists of PACs formedby corporations without capital stock andPACs formed by incorporated cooperatives.

category Number of PACs Gain or Lossof PAC as of 12/31/90 Since 711/90

Corporate 1,795 +13Labor 346 0Trade/me!1lber-

ship/health 774 +21Noncoflected 1,062 -53Other 195 -2

e Total 4,172 -21

FEDERAL ELECTION COrvlrvllSSIONMarch 1991

posed sale of the computer will not resultin a contribution from the purchaser:a The committee purchased the computer for

its own particular use (rather than as afundraising item);

o The computer has an ascertainable marketvalue; and

o The committee is apparently contemplatingtermination. See ADs 19B9-4 and 1985-1.

In order not to be considered a contri­bution, however, the purchase price of thecomputer must not exceed the usual and nor­mal charge on the retail market at the timeof sale. See 11 CFR- lOO.7(a)(1)(iii) (B).

If the committee sells the computer atthe usual and normal charge (and thereforeno contribution results), the committeemust report the money it receives under the"Other Receipts" category on the DetailedSummary Page, itemizing the entry if thetransaction exceeds $200. 2 U.S.C. S434(b)(2)(J); 11 CFR 104.3(a)(3)(x).

Personal Use of ProceedsBecause Mrs. Smith is "grandfathered,"

i.e., she was a Member of Congress on Janu­ary 8, 1980, she may convert excess cam­paign funds tO'personal use under 2 u.s.c.§439a. (See also 11 CFR 113.2.) (Candi­dates who are not "grandfathered" areprohibited from doing so.) In November1989, Congress amended section 439a tophase out the personal use exception forgrandfathered members. See the section 504of the Ethics Reform Act of 1989, P.L. No.101-194.

The amendment placed a limit on theamount of excess campaign funds that may beconverted to a "grandfathered" candidate'spersonal use: "the amount equal to the[campaign's] unobligated balance on hand onthe date of the e~actrnent of this Act (NOV­ember 30, 1989]."

The Smith Committee asked whether pro­ceeds from the sale of the computer couldbe included in the Committee's November 30,1989, unobligated balance for purposes ofconverting the proceeds to Mrs. Smith'spersonal use. The Corrrnission offered twooptions for determining the Committee'sNovember 30 balance. under Method A, onlycash assets may be included in the balance.Method B permits the fair market value ofthe committee's noncash assets to beincluded in the balance, but additionalreporting is required under this method.

1The amendment further pt"ovided that thepersonal use exception will completelyexpire for grandfathered officeholdersserving after the 102nd Congress, whichends on January 3, 1993.

B

Volume 17, Number3

Method A: cash Assets Only. Thismethod construes the balance to be thecommittee's cash on hand, as defined under11 eFR 104.3(a)(I), on November 30, 1989,minus any debts and obligations owed by thecommittee. (Section 104.3(a)(I) definescash on hand to include currency; thebalance on deposit in banks and otherinstitutions; traveler's checks; certifi­cates of deposit, treasury bills and anyother committee investments.) The amountof excess campaign funds converted to thecandidate's personal use may not exceedthis balance. If, however, the committee'sunobligated balance drops below the Novem­ber 30 amount, noncash assets (such as thecomputer) may be liquidated and added tothe current balance up to the Novemberceiling.

For example, based on the 8mith commi t­tee's 1989 year-end report, the Committee'sunobligated balance on November 30. 1989-­its net cash-onihand amount--was $32,775under Method A. If the Committee's bal­ance falls below this figure, the fundsreceived from the sale of the conputer maybe added to the current balance in order tobring the excess funds available for per­sonal use back to the November 30, 19B9,amount.

Under this method, unliquidated cam­paign assets-for example, a car--may bedirectly converted to the candidate'spersonal use (i.e., given to the candidate)as long as the value of the asset, whencombined with other outlays of personaluse, does not exceed the November 30balance.

Any personal use of committee funds orassets after November 30, 1989, will countas a drawdown on the ceiling. If, forexample, the Smith Committee had converted$2,000 to personal use after November 1989,the unused ceiling balance would drop to$30,775. This would also be true underMethod B.

Jllethod B: Cash and Noncash Assets.The second method permits a committee toinclude in the November 30, 1989, figurenot only the co~ttee's net cash-an-handbalance but also the fair market value ofnoncash assets held by the committee on

2Thi s figure was derived by determining theCommittee's net cash on hand at the end of1989 (cash on hand of $32,551.52 minus $0debts and obligations owed by the Commit­tee) and backing out December activity,i.e., subtracting receipts received inDecember ($230.13) and adding disbursementsmade in December 1989 ($453.84).

•

...-----------------------

FEDERAL ELECTION COIVlMISSION

•March 1991

that date. Noncash assets would includeitems purchased by the committee (e.g.,cars, computers) as well as any unliqui­dated in-kind contributions received byNovember 30, 1989, such as contributions ofstocks, bonds and art objects. However,under this method, the committee must file,as an amendment to its 1989 year-endreport, a separate memo entry Schedule Aitemizing each asset (date acquired; fairmarket value as of November 30, 1989; andan explanation of the basis used to ascer­tain the aSset's value). Moreover, in thereport covering the period when an asset isdisposed of (e.g., sold or given to thecandidate for personal use), the committeemust disclose the asset's fair market valueon that date.

under Method B, certain co~ttee

receivables may also be treated as assetsand included in the Nove~ber 30, 1989,unobligated balance: debts and loansreported as owed to the committee as ofNovember 30, 1989 (as long as the committeeactually collects on the debts) and creditsor refunds payable to the cornmi ttee byvendors. These types of receivables, how­ever, must be itemized on Schedule C or 0of the committee's 1989 year-end report (oran amendment thereto).

under Method e, if the Smith Committeeadds the fair market value of the computer(for illustration purposes, $700) to thecommittee'S net cash-on-hand balance as ofNovember 30, 1989. the addition will in­crease the ceilinq on funds and assetsconvertible to personal use to $33,475($32,775 plus the $700 computer). The Com­mittee must amend its 1989 year-end reportto itemize the computer on a memo entrySchedule A.

Tax RamificationsThe Commission expressed no 0plnlon as

to any tax ramifications concerning the useof excess campaign funds because suchissues are outside its jurisdiction.

Commissioner Thomas J. Josefiak filed aconcurring opinion. (Date Issued: January18, 1991; Length, 8 pages, includingconcurring opinion)

N) 1990-27: Transfer to Party's FederalAccount of Funds MistakenlyDeposited in State Account

Based on the unique factors in this situa­tion, the Connecticut Republican party maytransfer to its federal account certainescrowed funds that were originally trans­ferred to the party from a federal candi­date committee but that were mistakenly

9

Volume 17, Number 3

deposited in the Party's nonfederalaccount.

In anticipation of terminating, Con­gressman John Rowland's principal campaigncommittee transferred $103,765 in excessfunds to the Connecticut Republican Party(the party Committee), which deposited thefunds in a nonfederal account. The StateElections Enforcement commission of Con­necticut determined that the deposit of theRowland funds in the party's nonfederalaccount violated a provision of state law.In compliance with a conciliation agreementresulting from the state violation, theparty Committee transferred $71,565 fromthe state account to an escrow account; theother $32,200 in misdeposited funds, whichthe nonfederal account had contributed toMr. Rowland's gubernatorial committee, werereturned to the pa~ty Committee and alsodeposited in the escrow account. The stateconciliation agreement provided that theparty Committee would transfer the escrowedfunds to the federal account if the FederalElection Commission approved such a trans­fer.

Commission regulations prohibit thetransfer of funds from a committee's non­federal account to its federal account(except for payment of allocated expenses).11 CFR 102.5(a)(1)(i). In this case, how­ever, the Party Committee may transferfunds from the escrow account to its feder­al aCcoWlt, given the unique combination offactors presented in the advisory opinionrequest:o The original transfer of excess campaign

funds was lawful, since the Federal Elec­tion Campaign Act (the Act l and FEe rulespermit a candidate committee to transferunlimdted excess campaign funds to aparty committee (2 U.S.C. S439a; 11 CFR113.1(e) and 113.2(c);

o The funds could have been deposited inthe federal account at the time of thetransfer, and the failure to do so was"in honest clerical error" 1

o In most significant respects, the contri­bution limits and prohibitions of Con­necticut law are consistent with those ofthe Act; and

o The transfer of funds to the escrowaccount, and the proposed transfer to thefederal account, were prescribed by astate election agency enforcing applica­ble state law (rather than being proposedby the party Committee to seek an exemp­tion from the transfer prohibition).

(Date Issued: January 18, 1991;Length: 4 pages)

March 1991 FEDERAL ELECTION COMMISSION Volume 17, Number 3

- - - - . ~ .....~ ~ -- - - - ~

. ~ . '; . .~ - :....

- - . .. - ~ ~

FEe v. ORAPJESI FOR CCNiRESS CCJ'IDIIITTEEHaving previously found Russell E.

paul, as treasurer of th~ committee, incontempt of court for1failing to pay a$5,000 civil penalty, the U.S. DistrictCourt for the District of New Jersey issuedan order on January 2, 1991, in which Mr.Paul agreed to pay a total of $5,317 to theFEe. (Civil Action No. 85-4093.) Thatamount represents the original $5,000penalty, $91 in interest charges and $226in FEe costs. The Commission agreed towaive the contempt penalties of $50 a day,which had been accumulating since theSeptember 5, 1990, contempt order. How­ever, if Mr. Paul does not pay the FEC the$5,317 stipulated in the current order byMarch 1, 1991, the contempt penalties(accruing from October 10, 1990) will beimmediately due.

The court issued a consent order iropos- •ing a $2,000 civil penalty against thecommittee and permanently enjoining it fromfuture similar violations.

FEe v , SP'EELI'WlOn January 28, 1991, the U.S. District

Court for the District of Maryland issued aconsent order and judgment in which the FECand Harry speelman agreed that defendantspeelman exceeded the contribution limitsof the Federal Election Campaign Act bymaking a total of $11,470 in contributionsto American Citizens for political Actionduring 1987. These contributions exceededthe $5,000 per year limit under 2 U.S.C.§441a(a)(1)(C). The court permanentlyenjoined Mr. Speelman from future similarviolations of the Act. Because of exten­uating circumstances that came to theagency's attention after it had filed thissuit, the Co~ssion agreed to drop itsrequest for a civil penalty and courtcosts. (Civil Action No. 90-2190.)

FEe v_WEST VIRGINIA REPUBLICANSTATE nECtJTIVE <:DRU'ITEE

On January 18, 1991, the u.s. DistrictCourt for the Southern District of westVirginia entered a judgment that was agreedto by the FEC and the defendant committee.(Civil Action No. 2:90-0B98.) The partiesagreed to the following points:o In conducting a phone bank voter drive on

behalf of the Presidential ticket--anexempt party activity--the committee alsomentioned the names of House and Senatecandidates but failed to report any partof the phone bank expenditures as contri­butions allocated to the House and Senatecandidates, in violation of 2 U.S.C.§434(b) .

o The committee incorrectly reported asn operating expendi tu re s" ce rta in di5­bursements for newspaper advertisementsthat advocated the defeat of a federalcandidate, a second violation of 2 U.S.C.§434(b) .

o The committee used its nonfederal accountto make the phone bank and newspaper adexpenditures described above, a violationof 11 CFR 102.5(a).

o The committee failed to itemize certaincontributions and transfers it receivedand failed to disclose year-to-datetotals, a third violation of 2 U.S.C.§434(b) •

1A summary of the contempt order appears inthe November 1990 Record.

10

NEIi LITIGATIQf

FEX: V. NRA PoBtical View')' FundThe FEe asks the district court to

declare that the NRA Political VictoryFund, the separate segregated fund of theNational Rifle Association, and its treas­urer violated 2 U.S.C. §441b(a) by accept­ing a corporate contribution totaling$415,745 from the National Rifle Associa­tion-Institute for Legislative Action(ILA), a lobbying arm of the NRA thatoperates from a corporate account. speci­fically, the FEC alleges that in 1988 ILAinitially paid that amount in solicitationexpenses for two Victory Fund fundraisersheld in March and July 1988. The VictoryFund, on August 1, 1988, reimbursed ILA forthese expenses. on October 20, 1988, ILApaid $415,745 to the Victory FUnd. Under11 eFR 114.5(b)(3), a corporation may reim,burse its separate segregated fund (SSF)for expenses that the corporation couldlawfully have paid as an administrativeexpense, but reimbursement must be made nolater than 30 days after the expense waspaid by the SSF. The FEC also asks thecourt to declare that ILA violated 2 U.S.C.§441b(a) by making a $415,745 corporatecontribution to the Victory fUnd.

Finally, the FEC requests that thecourt impose civil penalties against theVictory Fund and ILA. in the amount involvedin the Violation; permanently enjoin themfrom future violations; and award the FECits costs.

Volume 17, Number 3

axJRT CASESFEC v.

- Aug\iStIile for Congress, 2:7- Dramasi for Congress, 3:10

(continued)

ADVISORY OPINIaoJS1990-14: AT&T's 900-line fundraising ser­

vice, 2:41990-19: Vendor/coromdttee relationship;

sale and repurchase of fundraising items,1:8

1990-22: Blue Cross/Blue Shield's solicita­tion of member plans' personnel, 1:9

1990-25: Parent corporation's obligationsto labor organization under twice-yearlyprovisions, 2:5

1990-26: Sale of campaign asset; personaluse of excess funds after November 3D,1989, 3:7

1990-27: Transfer to party's federalaccount of funds mistakenly deposited instate account, 3:9

The first number in each citationrefers to the "number" (month) of the 1991Record issue in which the article appeared;the second number, following the colon,indicates the page number in that issue.

MlJR 3086Respondents: Williamette Citizen, AbnerLinwood Holton, III, treasurer (OR)COlIIplainant: Oregon Republi can Pa rty ,Richard B. Noonan, Executive DirectorSUbject: Disclaimer (newspaeradvertisement and flier)Disposition: Reason to believe but took nofurthe r action (newspape r); no reason tobelieve (flier)

SUbject: Failure to file report on timeDisposition: (a) Reason to believe buttook no further action; (bl no reason tobelieve

MUR 3149Respondents: (a) National RepublicanSenatorial Committee, James L. Hagen,treasurer (DC)i (b) Larry E. Craig (ID);(c) craig for U.S. senate, Richard W.Jackson, treasurer (10)Complainant: Robert F. Bauer, GeneralCounsel, Democratic Senatorial campaignCommittee (DC)SUbject: Excessive contributionDisposition: (a)-(c) No reason to believe

11

FEDERAL ELECTION COMMISSIONMarch 1991

MlJR 3082Respondents: (a) Scott for Congress, MarcJ. Zanghi, treasurer (CT); (b) Thomas Scott(CT)Complainant: Richard M. Bates, ExecutiveDirector, Democratic Congressional CampaignCommi ttee (DC)

MURS RELEASED '1U '!HE PUBLICListed below are MURs (FEe enforcement

cases) recently released for public review.The list is based on the FEe press releasesof January 7 and 11, 1991. Files on closedMURs are available for review in the PublicRecords Office.

unless otherwise noted, civil penalties~esulted from conciliation agreementsreached between the respondents and theCommission.

(U.S. District Court for the Districtof Columbia, civil Action No. 90-3090,December 20, 1990.)

MlJR 2750Respondents: (a) Friends of Voinovich,Vincent M. Panichi, treasurer (OH);(b) Bush/Ouayle '88, J. Stanley Huckaby,treasurer (DC)complainant: James M. Ruvolo, Chairman,Ohio Democratic party (OH)SUbject: Excessive in-kind contributions;failure to report in-kind contributions;disclaimerDisposition: (a) $3,500 civil penalty;(b) reason to believe but took no furtheraction

FEC v. Legi-Tech, Inc.The FEC asks the dist~ict court to

declare that Legi-Tech, Inc. (LTI) violated2 U.S.C. S438(a)(4) by using contributorinfo~mation copied f~om FEC reports forcorame rcial purposes. The FEe alleges thatLTI marketed a data base composed of infor­mation on individual contributors copiedfrom reports. At least one firm subscrib­ing to this data base used the data forcommercial purposes. The FEC also asks thecourt to assess a civil penalty againstLTI, permanently enjoin LTI from furtherviolations of section 438(a)(4) and awardthe FEe its court costs.

(u.S. District Court for the Districtof Columbia, Civil Action No. 91-0213,January 30, 1991.)

•

Official Business

FEDERAL ELECTION COMMISSION999 E Street, NW

Washington, DC 20463

•Volume 17, Number 3

Bulk Rate MailPostage and Fees Paid

Federal Election CommissionPermit Number G-31

FEDERAL ELECTION COIVlMISSIONMarch 1991

800 LINEAllocating expenses through ballot composi­

tion. 2:1staff advances and salaries, 2:6

- Legi-Tech, Inc., 3:11- Mid-America Conservative PAC, 2:10- NRA political victo~y Fund. 3:10- Political Contributions Data, Inc.,

2:8- Speelman, 3:10- Webb for Congress Commi ttee. 2: 10- West Virginia Republican State

Executive Committe~, 3:10v. FEe

----=-Common Cause; National RepublicanSenatorial Committee, Appellant {90­5317),1:7

- stern, 2:7