May 1992

FEDERAL ELECTION COMMISSION

999EStreet NW Washington DC 20463 Volume 18, Number 5

PUII.le FUNDINGrEX: .CIAIRMAN PRJI)IC1'S 1996 SIlORI'FALL

In an April 3 press conference, Chair­man Joan D. Aikens announced that, althoughthe Presidential Election campaign Fundwill narrowly.avoid a shortfall for thisyear's Presidential elections, the Fundwill defini tely run out. of money for the1996 elect.ions unless Congress takesaction. The FEC estimates that, without alegislative change in the mechanism forfunding the elections, the 1996 shortfallwill run between $75 and $100 million.

Chainnan Aikens said a shortfall wasinevitable due to a "fatal flawP in thepublic funding program: The taxpayerchec)coff on federal income tax retu rns-thesole source of public funding for Presiden­tial elections-has remained at one dollarsince its inception in 1973; by contrast,payouts to candidates and convention com­mttees are indexed for inflation. Forexample, this year's Democratic and Repub­lican nominees in the November electionwill each receive $55.2 million in publicfunds-more than double the $21.8 millioneach candidate was paid in 1976. The C~mission has alerted Congt"Rss to the needfor legislative change if the public fund­ing system is to survive.

The Chai~ also explained why a 1992shortfall, predicted earlier by the FEC,has been averted.

First, 1992 requests for matching fundshave been much lower than in previous elec­tion cycles; thus far, candidates havereceived only $17 million. This is partlythe result of the candidates' late startand the r;Inal! number of candidates-onlynine-that have qualified for matchingfunds.

Second, II'()re money was available formatching fund payments than the FEe hadanticipated. Inflation was lower thanpreviously estimated, leavin<J more moneyavailable for matching funds once publicfunds were set aside for the major partynominees, whose grants are indexed toinflation. Additionally, checkoff receipts

for tax returns processed during the firsttwo months of this year totaled $5.5 mil­lion, $1.6 million more than last year.The Chaiman said it was too early to tellwhether this was due to increased publicawareness or merely to more taxpayersfiling early.

Chairman Aikens released information oncheckoff participation for tax returns

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TABLE OF CCN'l'I!Nl'S

PUBLIC FUNDDG1 1996 Shortfall2 1\pril Matching Fund payments

BEX.;lJLATICNS3 proposed Rules on Transfers from Candi­

date's Nonfederal Campaign4 proposed Rules on Disclaimer Notices and

Fundraising projects

4~: Corporate;'Labor, DC

LmISlATICfi5 FEe Recortmlends Changes to Election Law

5~: Campaign Finance Law 92

5 PUBLICATIOOS: 1992 Disclosure Directory

6 AfNISORY OPINICIm

9 COORT CASES: New Litigation

REPORl'S9 Change in Ohio and South Carol ina

Primary Dates

AlJDITS10 1988 Robertson Campaign10 Correction to Bush flepayment

11 FEI>EML Rl!DISTER NOl'ICES

11 PUBLIC .APPFoARMCES

12 INDEX

*These candidates have withdrawn from thePresidential race. Governor wilder with­drew on January S. Senator Kerrey on March6, Senator Harkin on March 9 and formerSenator Tsongas on March 19.

APRIL Rl\'1'CBING n.m PAYPIENl'SOn March 30, the Commission certified

over $4 million in matching fund paymentsto eight candidates. The U.S. Treasurymade the payments early in April. As ofthe April payment, 1992 Presidential pri­mary candidates have received $16.8 millionin matching funds, as shown in the table.candidates have requested $5.8 million forthe May payment.

Matching Fund Payments

Republicanspatrick Buchanan $1,043,306 $ 2,091,035George Bush 666,877 4,901,097

DemocratsJerry Brown 306,798 857,506Bill Clinton $1,112,939 3,169,603*Tom Harkin 185,721 1,734,407*Bob Kerrey 357,738 1.624,3'80*Paul Tsongas 347,647 1,093,389*Douglas Wilder 0 289,027

New Alliance PartyLenora Mani 143,693 1,033,094

Totals $4,164,719 $16,793,739

filed last year. The first question on thefederal tax form is: "DO you want $1 to goto the presidential Election CampaignFund?" Nationally, 19.5 percent of returnsfiled in 1991 had the "yes" box checked.While participation reached a high of 28.7percent for returns filed in 1980, it hashovered at about 20 percent in recentyears. State-by-state statistics forreturns filed in 1991 showed that Hawaiihad the highest participation rate (32percent) and Idaho, the lowest (9 percent).(call the FEe for information on specificstates. )

The press conference was also held tourge the 40 million Americans who had yetto file their tax returns to "make an in­formed choice" when answering the checkoffquestion. "Taxpayers typically check a boxor leave it blank based on misconceptions,not facts, It the Chainnan said. "Whetherthey check 'yes' or 'no,' we want taxpayersto make an informed choice." To educatetaxpayers on the checkoff during the recenttax season, the FEe sponsored a nationwidepublic awareness program that featuredmedia public service announcements as wellas a toll-free checkoff hot1ine to order afree brochure explaining the PresidentialFund.

"We want taxpayers to know that presi­dential candidates who accept these publicfunds mu.st limit their campaign spending,"the Chai~ said. She also stressed thatthe funds can only be used for legitimatecampaign expenses.

Chairman Aikens pointed out that check­ing uyes " does not change the filer's taxobligation or reduce his or her refund; itsimply directs that one dollar of U.S.Treasury money be used for Presidentialelections.

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Volume 18, Number 5

AprilPayment

FEDERAL ELECTION COMMISSIONMay 1992

Federal Election coamissian, 999 E Street, _, washington, DC 20463800/424-9530 202/219-3420 202/219-3336 (TOO)

Joan D. Aikens, ChairmanScott E. 'ltlomas, Vice ChairmanLee Ann ElliottDanny L. McDonaldJohn warren McGarryTrevor Potter

walter J. Stewart, Secretary of the senate.Ex Officio Commissioner

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

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REGULATIONS

PROPOSED ~<llS CliI TlWlSFERS FRlJICANDlIlM'E'S IDiFEDERAL CANPAIW

on April IS, the Co:mdssion published aNotice of Proposed Rulemaking seekingcomments on a proposed regulation on trans­fers from a candidate's state or localcampaign to his or her federal campaign (57FR 13054). The current regulations at11 eFR 110.3(c)(6) allow a nonfederalcampaign to make such transfers as long asthe transferred funds do not containcontributions that are impermissible underthe Act (i.e., "soft money",) The proposedrule responds to a peti ticn for rulemakingfiled by Congressman William Thomas (RICA).His petition alleges that the regulationsfail to prevent nonfederal campaigns fromusing impermissible funds to raise permis­sible contributions that are then trans­ferred to federal campaigns.

The Commission also seeks comments on anumber of related questions and alternativeapproaches, described below. Interestedparties are welcome to raise other issuesthat the commission should address. Com­ments must be received by May 15 and shouldbe addressed to Ms. Susan E. Propper,Assistant General Counsel, 999 E street,NW, washington, DC 20463.

Should the Commission decide to promul­gate a new rule on nonfederal campaigntransfers, it would not become effectiveuntil the next election cycle.

Exclusion of COntributions Raised withImpermissible Funds

The proposed regulation would require anonfederal campaign to exclude a contribu­tion from the amount transferred if itresulted from a fundraising activityfinanced with funds prohibited under theAct. The Commission is also considering anamendment that would require the federalcampaign, when reporting the receipt of anonfederal transfer, to certify that thetransferred contributions were raised usingpermissible funds.

Partial Impermissible Funding. Theagency seeks comments on certain practicalquestions raised by the proposed rule. Ifa fundraising activity was only partiallypaid for with impermissible funds, shouldall the contributions received from thatfundraiser be ineligible for transfer tothe candidate'S federal campaign? Orshould only a portion be ineligible based

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on the percentage of permissible funds usedto finance the fundraising activity?

If the percentage approach wereadopted, how should the candidate determinewhat percentage of fundraising expenses waspaid with permissible funds if multipledisbursements for the fundraiser were madeover several clays? Should the candidateexamine the cash on hand on each disburse­ment date to determine the percentage?What if, on a given disbursement day, theratio of permissible to impermissible fundsin the account is lower than the ratio ofpermdssible to impermissible funds ulti­mately received from the fundraisingact!vity? Should the candidate be allowedto offset lower ratios on same disbursementdays with higher ratios on other disburse­ment days, thereby maximizing the amount ofpermissible funds eligible for transfer?

Alternative: Prohibit All NonfederalTransfers. RecogniZing the difficulty ofdemonstrating that transferred contribu­tions were raised with permissible funds,the Commission 1s seeking comments on analternative proposal that would prohibitall transfers of funds from nonfederal tofederal cauq;>aigns.

Contributor AuthorizationsThe proposed rule would require a

nonfederal campaign to inform contributorsof its intention to transfer their contri­butions to the candidate's federalcampaign. The nonfederal campaign wouldhave to exclude from the transfer thecontributions of any contributor who didnot provide a written authorization for thetransfer. The notice also seeks cormnent ona second approach that would allow thenonfederal campaign to transfer a contribu­tion as long as the contributor did notobject.

Nonfederal campaign's Segregation ofPermissible Funds

Some nonfederal campaigns may choose toset up separate accounts for permissibleand impermissible funds in order to simpli­fy the recordkeeping process for futuretransfers to a federal campaign. undersuch circumstances, should the activity beseen either as election-influencing activ­ity that may trigger federal candidatestatus under 11 eFR 100.3 or as testing­the-waters activity under 11 CPRlOO.7(b)(1)?

(Regulations continued next page)

FEDERAL ELECTION COMMISSIONMay 1992

PIIJPOSE[) Bl!QTLM'ICfiS Cfi DISCLAIMER OOTICESAND SPECIAL FlINDRAIS!N3 PROJFC1'S

The C~ssion recently published aNotice of proposed Rulemaking seeking cam­ments on draft regulations that address twoareas of change: (1) the disclaimer noticerequired on solicitations by unauthorizedcommittees; and (2) the use of a candi­date's name in the name of an unauthorizedcommdttee's fundraising project. (un­authorized committees are those not author­ized by a candidate, such as party commit­tees and PACS).

The proposed rules, summarized below,were published in the Federal Register onApril 15 (57 FR 13056). Comments are dueon May 15 and should be addressed to Ms.Susan E. Propper t Assistant General Coun­sel, 999 E Street, NW, Washington, DC20463.

Disclaimers by unauthorized CCIIIDitteesunder the current disclaimer regula­

tions, when an unauthorized committeesolicits funds for itself through generalpublic advertising but does not advocatethe election or defeat of any candidate,the disclaimer must simply state who paidfor the communication. See 11 CFR110.11(a)(1)(iv){A). The proposed rulewould additionally require the disclaimerto state whether the cornnnmication wasauthorized by any candidate or candidate'scommittee, even if the solicitation did notmention any candidate. This additionaldisclaimer requirement, however, would notapply to solicitations by national partycommietees .

The proposed change would conform theregulation with 2 U.S.C. §441d(a)(31.

Use of candidate's Name inSpecial Project Name

While an uneutnorfeed committee isprohibited from using a candidate's name inthe committee's registered name, the com­~ttee may solicit contributions for itselfWlder a special project name that includesthe name of a candidate, such as "Americansfor John Doe.1I Concerned that the publiccould misinterpret these solicitations tomean that contributions would be going tothe candidate, the Commission has proposedthe following rules to minimize the poten­tial for confusion in this situation.a A new regulation Wlder 110.11(a)(1){iv)

would require the disclaimer to state thename of the committee paying for thesolicitation and whether the specialproject has been authorized by the candi­date named in the project title or anyother candidate. (For example: "Paidfor by the xYZ Committee. Not authorized

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Volume 18, Number5

by John Doe or any other federal candi­date.")

o under proposed l02.14(d), the committeewould have to return or refund any checksreceived in response to the solicitationif they were not made payable to the com­mittee's registered name.

The Commission also seeks comments onrelated issues:o Whether the regulations should treat

party committees differently, given aparty's interest in using a candidate'sname in a fundraising event for anothercandidate or for general party fundrais­ing;

o Whether the use of a candidate's name inthe name of a special project should bebanned unless the candidate gives permis­sion; and

o Whether the regulations should specifythe size and placement of the proposeddisclaimer notice.

lXlRPORATI!/LAO CDiFEIU'NCE~, OC, MAY 21-22

This one and one-half day confer­ence will focus on the canq;>a.ignfinance law's requirements for corpo­rations, trade associations, labororganizations and their PACs. Callthe FEC to receive a conferenceinvitation (800/424-9530 or 202;219­3420) .

The conference will be held at thewashington Court Hotel, 525 New JerseyAvenue, NW, Washington, DC 20001-1527;202/628-2100. (When making reserva­tions, notify the hotel that you willbe attending the Fee conference).

The $105 registration fee must bepostmarked by May 7 to avoid a $10late fee. The fee includes materials,breakfasts, lunch and refreshments.

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LEGISLATION

FEe~ caAiu:s TO ELECl'IW INfOn April 3, the Commission sent its

1992 legislative recommendations to thePresident and the Congress. The documentasked Congress to consider making severalchanges to the Federal Election campaignAct arid the public fW1ding statutes. TheCommission believes that the reconunenda­tions, if adopted, would enhance the agen­cyl s ability to administer and enforce thelaw. Included in the package of 36recommendations were three new proposals.c $25,000 Annual Limit. The FEe suggested

that an individual's contribution to acandidate should count against the$25,000 annual lim t for the calendaryear in which the contribution is maderather than the year of the candidate'selection. This would eliminate confusionand inadvertent violations when individ­uals make contributions in the currentyear for elections to be held 1n futureyears or make contributions to retire thedebts of elections held in previousyears.

o Incomplete contributor Information. Toaddress the recurring problem of reportslacking complete contributor information,the FEe recommended that coromittees berequired to make an additional requestfor any missing information after a con­tribution is received. The request wouldhave to state that the committee was re­quired to disclose the information underfederal law. The Commission also sug­gested that contributors be made liablefor submdtting information that they knowto be false.

o Honoraria Teclmical Amendment. Becausethe commission has no jurisdiction overhonoraria transactions occurring afterAugust 14, 1991, the date When 2 U.S.C.§441i was repealed, the Cammdssion askedCongress to delete honoraria from thelist of definitions of what is not acontribution (2 U.S.C. §431(8)(B)(xiv».

of the remaining recommendations, sub­mdtted in previous years, several soughtchanges in the public funding program. Oneof these alerted Congress to the projected1996 shortfall in the Presidential Electioncampaign Fund, stressing that legislativeaction is essential to preserve the publicfunding system (see page 1). The agencyalso asked Congress to amend the matchingfund program by imposing stricter eligibil­ity requirements and by eliminating thestate-by-state spending limits.

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Volume 18, Number 5

1992 SUVIARY OF STATE CAMPAIGNFINl\NCE INIS

Recently published by the FEe'sClearinghouse on Election Adndnistra­tion, ~ign Finance Law 92 containssummanes of the campaign finance lawsin each state with citations to therelevant state code. It also includesquick reference charts listing eachstate's reporting requirements, con­tribution and solicitation restric­tions and expendi ture limi tations.

To purchase a copy, list the titleand stock number (052-006-00052-0) andenclose a $28 check made payable tothe superintendent of Documents. Sendthe order to: Superintendent of Docu­ments, U.S. Government printingOffice, Washington, DC 20402.

For further information on this andother Clearinghouse publications, call800/424-9530 (ask for the Clearing­house) or call the office directly at202/219-3670.

PUBLICAl'lONS

1992 DISCLOSURE DIREC'IDRY AVAILABLEThe FEe recently released the 1992

edition of the combined Federal/StateDisclosure Directory, a guidebOok listingthe state ana federal offices responsiblefor disclosing reports and information ina number of areas.o Campaign financeo Personal finances of officials and

candidateso Public financingo Spending on state initiatives and

referendao Lobbyingo Candidates on the balloto Election resultso voting accessibilityo Election-related enforcement actionso Corporate registrations

The directory identifies office super­visors and other individuals knowledgeablein the subject areas. Fax numbers are alsolisted.

A limited number of copies are avail­able free of charge. To order, call800/424-9530 and ask for PUblic Records ordial the office directly at 202;219-4140.

May 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 5

ADYISMY OPINI<R-~Recent requests for advisory opinions

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

AOR 1992-12candidate's ownership of campaign van aftercampaign is over. (Requested by LaRoccofor congress; Date Made Public: Mrch 26,1992; Length: 4 pages)

1Qt 1992-13Loans to law firm of attorney consideringbecoxning a candidate. (Requested by JamesM. Blackburn; Date Made Public: April 9,1992; Length: 13 pages)

JlDR 1992-14Candidate's instructions on use of excesscampaign funds in event of his death.(Requested by Congressman Dan Burton; DateMade Public: April 21, 1992; Length: 1page)

AL'I.'I!JI'i\TE DISPOSITIWOF ADVISORY OPINICN RfQJEST

AOR 1991-30: Tax Exempt Corporation'sLOtbyinq ccmun.icationsto contributors Listed onFEe Reports

Requested on behalf of Citizens for a SoundEcOl101'\1:f, Inc. on April 2, the Conmti.ssionfailed to approve an advisory opinion bythe requi.red four votes. See AgendaDocuments #91-104 and #92-43.

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M 1991-32: Charqes for IncorporatedCOnSUltant's Ftmdraisinqservices

CEC. Inc., a new campaign fundraisingcompany, plans to develop a highlyresponsive donor list by sending out aninitial solicitation to identify individ­uals who indicate a willingness to supportthe company's future clients: nOnincumbentRepublican candidates with conservativeviews. CEe's goal in developing the donorlist is to reduce fundraising costs byincreasing the rate of return per fundrQiis­ing letter. Based on the expected successrate of the donor list and attempts toreduce operating costs, CEC intends tooffer its services at Umaterially lower"fees than other consultants.

CEC's charges--especially consideringexpected losses during its first years,possible subsidies from company directorsand waivers of their salaries--raise theissue of whether the conpany will becharging less than the normal charge andthus making prohibited contributions to itscandidate clients.

Other aspects of CEC's proposed opera­tions also raise the issue of prohibitedcontributions: the content of the initialsolicitation; the recruitment of potentialcandidates as clients; the underpayment ofpolitical advisors; and the use of affili­ated companies' services. While certain ofthese activities will not result in corpo­rate contributions or expendit~res, othersare more problematic; in some instances,the Commission lacked sufficient informa­tion to make a determination.

Initial SolicitationUsing names purchased or acquired fram

other sources, CEC plans to send out aninitial mailing <lSkin9' readers fat' permis­sion to include their names on CEC's donorlist for future solicitations on behalf ofspecific candidates to be selected by eEC.

certain wording in the initial mailingcould be interpreted as promoting an elee­toral result <i.e., the request thatreaders consider future solicitations foras-yet-to-be-named conservative Republicannonincumbents) r thus raising the qUestionof whether the communication expresslyadvocates the election of clearly identi­fied candidates. Corporate expte~s

advocacy messages communicated beyond therestricted class are prohibited under2 u.s.c. §441b. In this case, however, thecommunication will ultimately be paid byCEC'5 client campaigns, since charges will

FEDERAL ELECTION COMMISSION

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include an amortized portion of the mailingcosts and other start-up costs. The initi­al solicitation is thus part of a commer­cial venture--an attempt to charge less byrealizing a high rate of return for clientsrather than an attempt to advocate supportof candidates. Therefore, no corporateexpenditures will result.

Recruiting Potential candidates as ClientsIn recruiting candidates as clients for

its services, CI!:C representatives JlIay meetwith announced candidates and with individ­uals interested in becomdng candidates.This activity will not result in prohibitedcontributions to announced candidates sincethe company will not provide anything ofvalue to them but will merely describe itsservices. Recruitrent of iodividuals whoare "testing the waters," however, couldinvolve an effort to persuade the individ­uals to become candidates, which would be aprohibi ted use of corporate funds. See11 eFR lOO.7(b)(1) and lOO.8(b)(1). TheCommission did not express any opinion onthis issue, lacking additional informationon recruitment communications.

CEC proposes to use informal advisors,both to evaluate candidates and potentialcandidates and to recruit those chosen byCEC. Although advisors may not receivefull compensation for thei r time, thei runcompensated services will not result incontributions to candidates because theselection and recruitment efforts are aimedat the solicitation of business rather thaninfluencing canpaigns. If, however,advisors were to persuade potential candi­dates to run, in-kind contributions wouldresult, both from the advisors (in theamount of their uncompensated services) andfrom CEC (in the amount reimbursed toadvisors for out-of-pocket expenses).

CEC's underpayment of informal advisorsmay also call into question the company'scharges to clients, discussed later in thissummary.

Candidate Solicitation ActivitiesCEC's solicitation letters on behalf of

candidate clients will appear on companyletterhead and will be signed by a companyofficer. (The letter will explain that thecontributions should be sent directly tothe candidate's canpaign.) The use ofcompany letterhead represents something ofvalue to the candidate but, as the mailingis a commercial activity, fully paid inadvance by the client, it does not repre­sent a corporate contribution. This con­clusion is qualified by whether CEC chargesthe usual and normal charge.

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As direct mail pieces, the letters mustinclude a disclaimer: Paid for by (name ofclient campaign). 11 CFR 110.11(a)(1).

CEC's Fees: Usual am Normal ChargeCEC will charge each client an advance

fee possibly in the range of $5,000 to$10,000 to cover costs directly related tothe solicitation letters. It will alsocollect a fee estimated at between 5 and 7percent of total contributions realizedfrom CEC's solicitation for the client.This charge will cover the conpany's day­to-day operating costs. CEC charges willinclude a portion of the company's start-upcosts. (Such costs will be amortized andincluded in the budget projections for thenext several years.) Due to start-upcosts, the company anticipates that it willoperate at a loss during its first years.

TO avoid making prohibited contribu­tions to its candidate clients, CEC mustcharge no less than the "usual and normalcharge" for its services, i.e., the pre­vailing commercially reasonable rate.11 CFR 100.7(a)(1)(iii)(B). Lacking infor­mation on normal industry practice, theCommission was unable to make a definitivedetermination as to whether CEC chargeswill be "usual and normal." The commis­sion, however, did consider the basis forthe lower fees.

CEC bases its low percentage charge(between 5 and 7 percent) on the expectedhigh rate of return from the donor list.This percentage may result in client feesequal to those charged by other ccnnpanies,should CEC's projected high returnsmaterialize. However, actual proceeds maynot meet projections. Furthe~re, CEC'spercentage may be substantially less thanfees charged by other direct mail companies(see AD 1979-36).

CEC's low fees are also based onreduced operating costs, partly achieved byusing temporary enq>loyees and by payingoutside consultants considerably less thanthe value of their services. Moreover, tocompensate the company for initial lossesits first years, at least one company offi­cer may, if necessary, provide additionalworking capital and agree to a salarywaiver.

In view of the company's policy tocharge "materially" less than otherconsultants, however, company losses(particularly OVer a long term), infusionsof capital to compensate for the loss,salary waivers-or any combination of thethree-would raise the rebuttable presump­tion that CEC was charging less than theusual and normal charge. To avoid making

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May 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 5

prohibited contributions, CEC should ensurethat charges for services and time providedto each client are commercially reasonableand that start-up costs are properly andreasonably amortized.

Use of Affiliated campany's servicesCEC, owned by Edgar prince, plans to

use office space, financial services andcharter aircraft services provided by threeother corporations owned by Mr. Prince.CEC will pay the usual and normal charges,paying office rent on a monthly basis andthe other charges within 30 days of thebilling date. These arrangements will notresult in corporate contributions. More­over, no contribution would result even ifCEC were to pay less than the usual andnormal charge or if billing or payment wereextended beyond a commercially reasonabletime, unless the services related to spe­cific campai<JI1s. However, such practicescould indicate that CEC's charges for itsown services are less than the usual andnomal charge.

(Date Issued: March 13, 1992; Length:17 pages)

AD 1992-3: Corporation's Payment ofBenefits for EmployeejCandidateon Unpaid Leave

Reynolds Metal Company may pay fringebenefits for an employee on unpaid leave topursue a federal candidacy because thebenefits will be paid under a preexistingcompany policy that applies to all employ­ees and because the period covered isrelatively brief--3l days.

Under FEC rules, a corporation Illay notpay fringe benefits, such as health andlife insurance and retirement, for anelllployee on leave without pay to partici­pate in a federal campaign. 11 erR114.12(c)(1). However, under the circum­stances presented--the preexisting generalpolicy and the limi ted extension of bene­fits--Reynold's payment of fringe benefitswill not be a prohibited contribution tothe employee's campaign but, rather, may beconsidered a form of compensation payableto the el1Tployee as "other earned leavetime" under section lOO.7(a)(3)(iii). Bycontrast, see N) 1976-70, where the corpo­ration did not have a preexisting policy.

Commissioner Scott E. Thomas filed aconcurring opinion. (nate Issued: March11, 1992: Length: 7 pages. includingconcurring opinion)

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NJ 1992-5; candidate' 6 Appearance in cablePublic Mfa!rs programs

Congressman James P. Moran may appear intwo-public affairs forums televised onlocal cable stations in his district. Theprograms will not result in contributionsto his 1992 reelection campaign becausetheir content will be restricted to a dis­cussion of public issues, with no mentionof his campaign.

lin activity involving or referring to afederal candidate results in a contributionor expenditure by the financial sponsor ifthe activity includes the solicitation oracceptance of contributions to the candi­date's campaign or the express advocacy ofany candidate'S election or defeat; anactivity may also be considered campaignrelated even without those two elements.See, for example, ADs 1992-6, 1990-5 and1988-27.

Neither of the series featuring Con­gressman Moran includes any solicitations,express advocacy or campaign promotion.Therefore, no contribution will result.(For a similar opinion on a candidate'sappearance in a radio public affairsseries, see AD 1977-42.)

My issues arising ft"om the Communica­tions Act. Federal communications Commis­sion rules or House of Representative rulesare outside the FEC's jurisdiction. (DateIssued: March 13, 1992: Length: 3 pages)

so 1992-8: Tax seminars as FundraisingMechanism

congressman William H. Orton may conducteducational seminars on tax and bankinglaws as a fundraising technique for hisreelection campaign. He plans to use theappropriate disclaimer in his promotionalbrochure, which will clearly inform thereader that the seminar fee is a contribu­tion to his campaign. His campaign willtreat all proceeds as contributions, andall related expenses as expenditures. Theact!vi ty is permissible because the lawdoes not curtail the fundraisi1l9 methods acampaign may use as long as the activitycomplies with all relevant FEe regulations.However, any t"mn1fications under the taxlaws or the rules of the House of Repre­sentatives are outside the Commission'sjurisdiction. (Date Issued: April 3,1992; Length: 3 pages)

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COURT CASES REPORTS

2Reports sent by registered or certifiedmail must be postmarked by the mailingdate; otherwise, they must be received bythe filing date.

3The mailing date is the same as the filingdate because the computed mailing datewould fall one day before the primary washeld.

aw«:;E IN PRiMARY DM'F.S FOR CilIO ANDSOO'lII CAROL1NPI.

The ohio legislature has postponed theMay 5 Congressional primary to June 2. InSouth carolina, a federal court rescheduledthe primary from June 9 to August 25; therunoff has also been rescheduled from June23 to September 8. The Ohio and SouthCarolina pre-election reporting dates thatappeared in the January issue are thereforeincorrect. The new reporting dates areshown below.

FilingDate

August 13

FilingDate

FilingDate

May 21

Reg./Cert. 2Mailing Date

August 273

Reg./Cert. 2llJailin9 Date

AUgust 10

May 18

fleg'.jCert. 2&ilil19 Date

CI05e1ofBooks

september 8 Runoff

August 5

May 13

Close1ofBooks

CHID PRIJW{Y, JUNE 2

August 25 Primary

Close1ofBooks

FEe v. PopUlist Party (92-0674)The FEe asks the court to declare that

defendants violated the law's prohibitionsand limits on contributions. In additionto the Populist party (a political commit­tee), the FEe names the following defend­ants: Liberty Lobby, Inc.; Cordi te Fidel­ity, Inc. (wholly owned by Liberty Lobby);the Bob Richards for President Committee,washington, DC (not authorized by anycandidate); Willis A. Carto, as treasurerof the two committees and individually (heis a di rector of the two corporations); andBlayne E. Hutzel individually (he is thecontroller of the corporations and thePopulist party).

The FEC asks the court to find that:o Liberty Lobby and Cordite Fidelity

made corporate contributions totaling$350,404 to the populist party.

o Mr. Carto consented to the making of theabove contributions.

o The populist party and Mr. Carto, astreasurer, knowingly accepted $368,304 incorporate contributions from LibertyLobby, Cordite Fideli ty , the Commi ttee toDefend Liberty Lobby and Seipold &Sasser, an incorporated law firm;

o Mr. Hutzel knowingly accepted those con­tributions (except $15,400 contributed bythe law firm);

o The populist party and Mr. carto, astreasurer, knowingly accepted $35,000from incHviduals in excess of thecontribution limits;

o The Populist party and Mr. Carto, astreasurer, made $28,333 in excessivecontributions to the Maureen Salaman forVice President Commdttee and $64,756 inexcessive contributions to the BobRichards for President Committee (DC);and

o Bob Richards for President committee (DC)and Mr. carto, as treasurer, knowinglyaccepted $9,756 in excessivecontributions from the Populist party.

The FEe further requests that the courtassess a civil penalty; order the commdt­tees and Mr. Carta to refund the excessiveand prohibited contributions; and perma­nently enjoin all defendants from furthersimilar violations.

u.s. District Court for the Districtof columbia, Civil Action No. 92-0674,March 19, 1992.

9

May 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 5

PINM. AlJDIT REPORT C61988 BCIJER'r.SCI'f CNU?AIGi

on March 26, 1992, the Commissionapproved the final audit report on Ameri­cans for Robertson, Inc. The committee wasthe Rev. Pat Robertson's 1988 Presidentialcampaign committee. Based on auditfindings, the Coomission made an initialdetermination that the cormnittee must repay$388,544 in public funds to the u.s. Treas­ury. Mr. Robe rtson had received $10.4million in matching funds.

The Conunittee has 30 days to disputethe repayment anount , The Commission willconsider any response from the commdtteewhen making a final determination.

The Commission's initial determinationsand significant audit findings are summar­ized below.

Sperding in Excess of Expenditure Limits

overall Limit. The final audit reportfound that the Committee had exceeded theoverall spending linti t by $1.025 million.Included in this amount was approximately$570,000 in apparent in-kind contributionsfrom two corporations that provided compu­ter equipment and charter airplane servicesto the Committee. (Auditors identifiedcertain linkages between the coqporationsand the candidate. For example, the ai r­plane primarily used by the campaign wasowned by Ai rplanes Inc., a subsidiary ofCBN Continental Broadcasting Network Inc.,of which Mr. Robertson was the director andformer president.)

FEC auditors calculated that, of the$1.025 million in excessive expendituresincurred by the Committee, $659,970 was

CORRECTrCN TO BVSB REPAYMENl'DE'I'EBMINATICN

The April Record article on theGeorge Bush for President Commdtteefinal audit report stated that thecommittee had to repay $79,235 inpublic funds, but that total failed toinclude an additional $33,845 repay­ment for stale-dated committee checks.The correct repayment amount is there­fore $113,080. The Bush Committee hasrepaid the entire amount to the U.S.Treasury.

10

paid when the committee's account containedmatching funds and was therefore poten­tially subject to pro rata repayment.

state Expenditure Limits. The finalaudit report also found that the Committeehad incurred expenses that exceeded theIowa and New Hampshire expenditure limitsby a total of $1.142 million. Reducingthis amount by debts that had not yet beenpaid, auditors determined that $1.110 mil­lion was subject to pro rata repayment.

Repayable Amount. The Commission basedits repayment determination on the largerof the amounts subject to pro rata repay­ment-the $1.110 spent in excess of thestate limits. Applying the formula used tocalculate what portion of that amountrepresented public funds, as opposed toprivate contributions (i.e., the pro rataportion), the Commission made an initialdetermination that the Committee repay$338,632.

Nonqualified campaign ExpensesThe audi t report found that the Commit­

tee had incurred $163,569 in nonqualifiedcampaign expenses such as tax penalties andundocumented transfers. The initial repay­ment determinations on these findingstotaled $49,912, the pro rata portion ofthese expenses.

Press Travel ReiIlbursementsFEe Auditors discovered that the Co~

mittee had apparently received excessivereimbursements from media firms for presstravel. The Commission approved a recom­mendation that, absent a showing to thecontrary, the Committee repay the firms$105,635.

FEDERAL ELECTION COMMISSION

PUBLIC APPEARANCES•

•

•

May 1992

.FEDERAL REGISTER

Copies of Federal Register notices areavailable from the Public Records Office.

1992-311 crn Parts 9034, 9036 and 9037: MatchingFund Submission and Certification Prace­~res for Presidential primary Candidates;Float Rules; correction to Announcement ofEffective Date (from November 6 to November7, 1991) (57 FR 6665, February 21. 1992)

1992-411 CFR Part 106: Allocation of Federal;Nonfederal Expenses; Final Rule; Trans­mittal to Congress (57 FR 8990, March 13,1992); Correction (57 FR 1113?, April 1,1992)

1992-511 em Parts lOO and 104~ Loans From Lend­ing Institutions to candidates and Politi­cal Committees; Final Rule; Announcement ofApril 2 Effective Date (57 FR 11262, April2, 1992)

1992-611 eFR Parts 102 and 110: special Fund­raising projects by Political C~ttees;Notice of proposed Ru1emaking (57 FR 13056,April 15, 1992)

1992-711 eFR Part 110: Transfers of Funds fromstate to Federal Campaigns; Notice ofProposed Rulemaking {57 FR 13054, April 15,1992)

11

5/11

5/15

5/18

Volume 18, Number5

HOpe Collegewashington, IX:Kathlene C. Martin, Informa­tion Services Division

Minnesota Insti tute of LegalEducation

Minneapolis, MinnesotaN. Bradley LitchfieldAssociate General counsel forpolicy

International Institute ofMunicipal Clerks

Salt Lake City, UtahJanet C. McKee, Clearinghouseon Election Admdnistration

May 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 5

'Ibe first number in eachcitation refers to the "number"(month) of the 1992 Recordissue in which the articleappeared; the second number,following the colon, indicatesthe page number in that issue.

ADVIsmY OPINI<Jtm1991-29: Contributions received

and made by coJ:POration'&employee pledge program, 1: 4

1991-32: Charges for consult-ant's fundraisin9 services,5:6

1991-33: Allocation of expenseswhen party commdttee adminis­ters primary election, 1:6

1991-34: COmmittee sale ofaccess to voter data base asongoing venture, 1:6

1991-35: Application of alloca­tion rules when SSF's nonfed­eral account pays its ownadBdnistrative expenses, 2:10

1991-36: Corporation's paymentof employee's travel expensesto attend party fundraiser,3:5

1991-37: Nonccnnected PAC'spayment to incorporated fi1lllfor shared facilities andservices contributed to com­mittees, 3:5

FEDERAL ELECTION COMMISSION999 E Street, NW

Washington, DC 20463

Official Business

1991-38: Repaytrent of embeZ'zledfunds to candidate conmittee,3:6

1991-39: Contributions sus­pected of being made in namesof others, 4:9

1992-1: campaign salary paid tocandidate; reimbursements forcampaign expenses, 4:9

1992-2: Party reallocation ofstaff salaries as fundraisingexpenses, 4: 10

1992-3: Corporation'S paymentof benefits for employee/candidate on unpaid leave,5:8

1992-4: campaign's payment ofcandidate's liVing expensesand spouse's salary, 4:10

1992-5: Candidate'S appearancein cable public affairsproqrams, 5:8

1992-6: Honorarium paid tocandidate for speech on cam­paign issues, 4:11

1992-8: Tax seminars as fund­raising mechanism, 5:8

COORr CASESFEe v.

- AFsCME=PQ, 1:7- NRA Political Victory FUnd,

1:7

- poPUlist party (92-0674),5:9

v. FEe~ins, 1:8, 3:7

- BraiiStoo1, 3:8- Common cause (91-2914), 1:9- Common cause (92-0249), 3:8- Freedom Republicans, Inc.,

3:7- LaRouche. 4: 8- National Rifle Association

of America (NRA) (89-3011),4:8

- Trinsey, 3:7

REPCRrINGPre-primary reportin9 dates

- Correction, OH, se, 5:9- House and Senate, 1:14- Presidential, 2:10: 3:10

Schedule for 1992, 1:10; 3:8

SPlH)Ir«; LIMITS FOR 1992Coordinated party, 3:1Presidential, 3:14

800 LINECompliance wi th laws outside

FEC's jurisdiction, 3:12Last-minute contributions: 48­

hour notices required, 1:18Registration by candidates and

their committees, 2:12

Bulk Rate MailPostage and Fees Paid

Federal Election CommissionPermit NumberG-31