June 2001 Federal Election Commission Volume 27, Number 6

Table of Contents Regulations Election Regulations Compliance 1 Independent Expenditure Administration Reporting Rulemaking Notice of Proposed 3 Coordinated General Public Rulemaking on Reporting of Advisory Panel on Election Political Communications Independent Expenditures, Administration Airs Concerns Last-Minute Contributions 3 Federal Register Voting technology and standards, On May 3, 2001, the Commission election management guidelines, Election Administration approved a Notice of Proposed election reforms and adequate 1 OEA Advisory Panel Meeting Rulemaking (NPRM), which seeks funding for the Federal Election comment on proposed changes to Commission’s Office of Election Alternative Dispute Resolution the procedures for filing certain Administration (OEA) were primary 4 ADR Program Resolves Cases reports of independent expenditures topics of discussion May 4-5, 2001, and last-minute contributions. The Administrative Fine Program at a conference of the OEA’s notice was published in the May 9, Advisory Panel in Baltimore. The 5 Committees Fined 2001, Federal Register (66 FR 5 Disclosure Improved Advisory Panel, established in 1976, 6 Use of Civil Money Penalties 23628). The proposed rules are is comprised of 20 state and local meant to implement statutory election officials from around the 6 Advisory Opinions changes to the Federal Election nation. The Panel advises the FEC Campaign Act (the Act) required by on the needs of election administra- Court Cases Public Law (P.L.) 106-346, enacted tors and how the OEA might best 8 FEC v. Friends for Fasi on October 23, 2000. The proposed serve those needs. 9 Christine Beaumont v. FEC rules also codify current procedures Panel members at the conference 9 On Appeal for filing reports on last-minute expressed concerns about securing contributions (i.e., 48-hour notices). sufficient funding for the OEA, Publications The new filing methods are intended 9 Disclosure Directory Available formerly known as the National to speed up disclosure and provide Clearinghouse on Election Adminis- Budget filers with more flexibility. tration. They affirmed that the 10 FY 2002 Request Filing Deadline OEA’s research and clearinghouse Under current regulations, reports functions provide necessary re- Reports sources for improving the adminis- 10 Arizona State Filing Waiver of independent expenditures of $1,000 or more made less than tration of elections. They expressed twenty days but more than twenty- support for additional and continued Outreach funding for the OEA’s efforts, and 10 Public Appearances four hours before an election (“24- 10 June Conference hour notices”) are considered timely they noted that their most immediate concern is support for the Voting Commission Systems Standards (VSS) Program. 11 FEC Semi-Finalist in “Innovations” Competition (continued on page 2) (continued on page 4) Federal Election Commission RECORD June 2001

Regulations • When a written contract, promise by a qualified nonprofit corpora- (continued from page 1) or agreement to make the indepen- tion.2 11 CFR 114.10. filed if they are postmarked for dent expenditure is executed; The Commission is proposing to certified or registered mail within 24 • When the communication is first allow filers to self-certify 24-hour hours of the time the independent disseminated to the public; or notices. This means that, in the case expenditure was made. Under the • When the person making the of 24-hour notices, notarization statutory changes and the proposed expenditure pays for it. would no longer be required. The proposed regulations set forth two rules, 24-hour notices would be The Commission seeks comments methods for verifying 24-hour considered timely filed only if they on this proposed definition— notices of independent expenditures. were received by the Commission or specifically, on whether this is an Reports filed in paper form (e.g., by Secretary of the Senate1 within 24 accurate reflection of when an hand delivery or fax machine) hours of the time the independent independent expenditure is likely to would be verified by the filer’s expenditure was made. have been “made.” The Commission also proposes to signature beneath the certification clarify when an independent expen- Methods of Filing language. Reports filed by e-mail diture is “made.” The proposed To assist filers in meeting the would be verified by requiring the definition states that an independent filing deadline, the Act and the filer to type his or her name beneath expenditure is made at the earliest of proposed rules would allow 24-hour the certification language. three possible events: notices to be filed by fax machine or The Commission seeks comments electronic mail. Persons other than on this and any other methods of political committees also would be certification (e.g., electronic notari- allowed to fax or e-mail any reports zation or digital signatures). of independent expenditures filed Proposed Changes to Electronic 1 under the regular reporting sched- The Secretary of the United States Filing Program Senate is the proper recipient of reports ules. Electronic filers would have to Under current regulations, those of independent expenditures that either continue to file all reports of filers participating in the support or oppose only Senate candi- independent expenditures using the dates. 11 CFR 104.4(c)(2). Commission’s electronic filing Commission’s electronic filing system. program must submit a paper copy The proposed revisions would of Form 5 or Schedule E, along with also clarify that 24-hour notices are the electronic copy, in order to file a Federal Election Commission not among those reports considered notarized document. In order to 999 E Street, NW allow all electronic filers to comply Washington, DC 20463 timely filed when postmarked for registered or certified mail. with the new requirement that 24- 800/424-9530 The statutory changes also hour notices be received within 24 202/694-1100 require that the Commission provide hours of the time when the indepen- 202/501-3413 (FEC Faxline) methods of verification of docu- dent expenditure was made, the 202/219-3336 (TDD for the Commission proposes to drop Form hearing impaired) ments, other than by signature, for all purposes, including certification 5 and Schedule E from the list of Danny L. McDonald, Chairman under penalties of perjury. Under reports for which a paper copy David M. Mason, Vice Chairman current regulations, the forms used follow-up is required. The Commis- Karl J. Sandstrom, Commissioner to disclose independent expendi- sion proposes to require electronic Bradley Smith, Commissioner filers to verify all reports of inde- Scott E. Thomas, Commissioner tures (i.e., FEC Form 5, Schedule E Darryl R. Wold, Commissioner or a signed statement) must contain a notarized certification, under James A. Pehrkon, Staff Director 2 The Commission also requests penalty of perjury, stating whether comments on whether to either: Lois G. Lerner, Acting General the expenditures were “coordinated” Counsel • Add to its regulations a requirement with any candidate, authorized that those who file a signed state- Published by the Information committee or agent thereof and ment instead of Form 5 certify that Division whether the expenditures were made the expenditure was not made to Louise D. Wides, Director finance, disseminate, distribute or Amy Kort, Editor republish campaign materials Jim Wilson, Associate Editor prepared by a candidate or a http://www.fec.gov candidate’s agent or committee; or • Remove this certification language from Form 5 and Schedule E.

2 June 2001 Federal Election Commission RECORD

pendent expenditures using the same Election Commission, 999 E Street, process that they would use to file NW., Washington, DC 20463. any other electronic report. Faxed comments should be sent to Federal Register 202/219-3923, with printed copy Federal Register notices are Reports Available Within 24 follow-up to insure legibility. E- available from the FEC’s Public Hours mail comments should be sent to Records Office. The statutory changes require the [email protected]. Those Commission to make an electroni- sending comments by electronic cally-filed document accessible on Notice 2001-5 mail must include their full name, e- General Public Political the Internet within 24 hours after the mail address and postal address document is received by the Com- Communications Coordinated within the text of their comments. with Candidates and Party mission. The Commission proposes Comments that do not contain this making all reports of independent Committees; Independent information will not be considered. Expenditures; Announcement of expenditures that were filed by fax, For further information, contact e-mail or the Commission’s elec- Effective Date (66 FR 23537, Ms. Rosemary C. Smith, Assistant May 9, 2001). tronic filing system available on the General Counsel, or Ms. Cheryl Commission’s Web site within 24 Fowle, Attorney, 999 E Street, NW., 3 Notice 2001-6 hours of receipt. Washington, DC 20463, 202/694- 1650 or 800/424-9530.✦ Independent Expenditure Reports of Last Minute Reporting; Notice of Proposed Contributions (48-Hour Notices) Rulemaking; (66 FR 23628, May The Commission also proposes Announcement of Effective 9, 2001). revising its regulations regarding Date for General Public reports by authorized committees Political Communications receiving contributions of $1,000 or Coordinated with Candidates more made less than 20 days but more than 48 hours (“48-hour and Party Committees; • At the request or suggestion of the notices”) before the day of an Independent Expenditures candidate, the candidate’s autho- election. The Commission has for The Commission’s new rules on rized committee, a party committee some time allowed authorized coordination of general public or their agents; committees to file these reports by political communications with party • After one of these persons or fax and, more recently, on-line in and candidate committees became parties has exercised control or addition to other permissible filing effective on May 9, 2001. See decision-making authority over the methods. The proposed revisions Federal Register Announcement of content, timing, location, mode, would codify fax and e-mail as Effective Date (66 FR 23537, May intended audience, volume of appropriate additional filing meth- 9, 2001). distribution or frequency of ods. The new rules define what is placement of that communication; meant by “coordinated expendi- or Commenting on Proposed tures,” through the addition of new • After substantial discussion1 or Regulations section 100.23 to 11 CFR. Expendi- negotiation between the purchaser, Comments must be received on tures that are coordinated with a creator, producer or distributor of or before June 8, 2001. All com- candidate or a party are considered the communication and the candi- ments should be addressed to Ms. in-kind contributions and are subject date, the candidate committee, the Rosemary C. Smith, Assistant to the limits, prohibitions and General Counsel, and must be reporting requirements of the (continued on page 4) submitted in either written or Federal Election Campaign Act. electronic form. Written comments Under 11 CFR 100.23(c), an 1 Under 11 CFR 100.23(c)(2)(iii), should be sent to the Federal expenditure for a general public substantial discussion or negotiation political communication is consid- may include one or more meetings, 3 Since reports of independent expendi- ered to be coordinated with a conversations or conferences about the tures that support or oppose only candidate or party committee if the value or importance of a communica- Senate candidates are filed with the tion for a particular election. The communication is paid for by any Commission clarified that whether Secretary of the Senate, these reports person other than the candidate’s may not be available on the these discussions or negotiations authorized committee or a party qualify as “substantial” depends upon Commission’s Web site within 24 hours committee and is created, produced of receipt by the Secretary of the their substance rather than upon their Senate. or distributed: frequency.

3 Federal Election Commission RECORD June 2001

Election Administration Regulations also agreed to file amended 1998 (continued from page 1) (continued from page 3) Post-General and 1998 Year-End reports and will attend a Commis- The FEC produced the first party committee or their agents sion-sponsored seminar on reporting national voluntary VSS for com- that results in collaboration or requirements. puter-based equipment in 1990. agreement about the content, On May 10, 2001, the Commis- These standards are used by the timing, location, mode, intended sion reached agreement with the National Association of State audience, volume of distribution or Illinois Senate Victory Fund (Vic- Election Directors (NASED) in its frequency of placement of the tory). Victory agreed to pay a civil national program, which provides communication. money penalty of $1,500 for failure for independent, third-party testing In addition, the definition of to provide a Schedule B for transfers of voting systems. The OEA has “independent expenditure” at 11 for its 1998 October Quarterly and been coordinating an update of these CFR 109.1 has been revised to 1998 Post-General reports. Victory standards with the NASED Voting conform with the new rules at 11 also will file amended 1998 October Systems Standards Board, which CFR 100.23. Quarterly and 1998 Post-General oversees the national testing pro- You many obtain a free copy of reports with the required Schedule B. cess. the final rules as they appeared in On April 24, 2001, the Commis- The draft of the revised VSS is the Federal Register (65 FR 76138) sion reached agreement with District scheduled to be released for public through the FEC Faxline. Dial 202/ 1199C National Union of Hospital review and comment in two seg- 501-3413 and request document and Health Care Employees Politi- ments, Volume I in late June and 246. For a summary of the new cal Action Fund (the Fund). The Volume II at the end of October rules, see the January 2001 Record, Fund agreed to pay a $2,000 civil 2001. Volume I will contain stan- p. 2.✦ money penalty for failure to estab- dards for the overall performance of lish a nonfederal account and for the voting systems. Volume II will use of nonfederal funds in connec- contain criteria for the subsequent tion with a federal election. The testing of automated vote tabulation respondent will attend an FEC- systems by certified independent Alternative sponsored seminar on reporting test authorities. The OEA will requirements. review recommendations obtained Dispute On March 6, 2001, the Commis- during a public comment period, Resolution sion reached agreement with the and it plans to incorporate appropri- Rogers for Congress Committee (the ate suggestions into the next pub- ADR Program Resolves Four Committee) and Jerry Spitler, Todd lished version of the standards. Spitler and Scott Spitler (Spitler): The FEC has requested $3 More Cases million in supplemental funds for During March, April and May, • The Committee agreed to pay a enhancement of the OEA, telling 2001, the Commission accepted four $2,550 civil money penalty for Congress in its proposal that the more agreements under the Alterna- accepting excessive contributions funds are sought “to better assist tive Dispute Resolution (ADR) and corporate contributions. state and local election administra- program, bringing the total number Committee staff will attend an tors, who are responsible for admin- of agreements reached to 12. The FEC-sponsored seminar on istering federal elections.” The FEC respondents, the alleged violations campaign committee reporting and would direct a large portion of this of the Federal Election Campaign will meet with Commission staff to funding toward further improving Act and the penalties assessed are review reporting procedures; and the VSS. listed below. • Spitler agreed to pay a $8,200 civil Additional details are available in On May 10, 2001, the Commis- money penalty for excessive a news release dated May 9, 2001. sion reached agreement with the contributions. The release is available: Liberal Party of New York (the Party). The Party agreed to pay a Closed ADR-negotiated settle- • On the FEC Web site at http:// civil money penalty of $6,000 for ment summaries are available from www.fec.gov/news.html; and failure to reconcile a cash-on-hand the Public Records Office at 999 E • From the Public Records (800/424- discrepancy between its amended Street, NW., Washington, DC 9530, press 3) and Press Offices 1998 Post-General report and the 20463, or at 800/424-9530 (press ✦ ✦ (800/424-9530, press 5). 1998 Year-End report. The Party 3).

4 June 2001 Federal Election Commission RECORD

Committees Fined Under Administrative Fine Program Administrative Fines Committee Civil Late/Nonfiled— Penalty Report* Committees Fined for Late Conseco Inc., Concerned and Nonfiled Reports Citizens PAC $675 Late—2000 Sept. M. On April 25, 2001, the Federal Danner for Congress $825 Late—2000 Oct. Q. Election Commission publicized its final action on 14 new Administra- Friends of Mark Brewer $8,000 Non—2000 July Q. tive Fine cases, bringing the total number of cases to 64. Civil money Hamilton for Congress $7,000 Late—2000 July Q. penalties are determined by the number of days the report was late IUE Cmte. on Political Education or whether the report was so late as International Union/Electronic Ele- to be considered not filed, the trical Tech. Salaried Mach. Workers $6,000 Non—2000 Oct. M. amount of financial activity in- volved and any prior penalties for Kilian for Congress $1,800 Non—2000 July Q. violations. Election sensitive reports, which include reports and Midnight Sun PAC $500 Late—2000 Sept. M. notices filed immediately before an election, (i.e., 48-hour notices, and Moore for U.S. Senate $700 Late—2000 Oct. Q. pre-primary, pre-special, pre- general, October quarterly and PECO Energy Company PAC $1,800 Non—2000 July Q. October monthly reports) receive higher penalties. The committees Ray Haynes for US Senate $388 Late—2000 Oct. Q. listed in the chart at right, and the treasurers of those committees, were Title Industry PAC $800 Late—2000 Oct. M. assessed civil money penalties when the Commission made its final United Assoc. of Steam/Pipefitters determination. Unpaid civil money Local Union 524 Pol. Action Fund $300 Late—2000 Oct. Q. penalties are referred to the Depart- ment of the Treasury for collection. U.S. Chamber of Commerce PAC $250 Late—2000 Sept. M. Closed Administrative Fine case files are available through the FEC Venturepac $500 Late—2000 Sept. M. Press Office, at 800/424-9530 (press 2) and the Public Records Office, at * “M” indicates a monthly report; “Q” indicates a quarterly report. 800/424-9530 (press 3).✦ the election. (Election sensitive decreased from 24 percent for the reports are those filed immediately year-end 1998 report to 11 percent Timely Disclosure Improved before an election and include pre- for the year-end 2000 report. The Under Administrative Fine primary, pre-special, pre-general, largest percentage drop in the Program October quarterly and October number of late filers occurred with Since the Administrative Fine monthly reports.) Committees filing recent monthly report filings. In Program was implemented with the reports after these late dates are 2000, the number of September 2000 July Quarterly report, the considered nonfilers. monthly reports filed late dropped number of reports filed late or not Under the Administrative Fine 16 percentage points from the 1998 filed at all has generally decreased. Program, the number of reports filed cycle, late November reports Reports are considered late if they late declined in each reporting decreased 18 percent from the 1998 are received after the due date, but period—except the monthly report cycle and late December reports within 30 days of that date. Elec- for August. For some periods, the decreased 28 percent from the 1998 tion-sensitive reports are considered decline in the number of late reports cycle. Overall, the percentage of all late if they are filed after their due was significant. For example, the reports filed late dropped from 21.7 date, but prior to four days before percentage of late year-end reports (continued on page 6)

5 Federal Election Commission RECORD June 2001

Administrative Fines cates to the Commission that the (continued from page 5) Advisory employee authorized his contribu- tion. percent in 1996 to 15.6 percent in Opinions In AO 1999-3, the Commission 2000 for comparable reporting approved the use of electronic periods. signatures to authorize payroll The number of nonfilers gener- AO 2001-4 deductions of contributions by ally has declined from the 1998 Use of Electronic Signatures members of the restricted class to an cycle, with the exception of the for PAC Contributions by SSF. The protocols adopted by the year-end report and several monthly Payroll Deduction corporation and SSF in that case reports where the number of The Morgan Stanley Dean Witter ensured that only authorized em- nonfilers has increased from 1998. & Co. Political Action Committee ployees could submit payroll The largest percentage decline in (MSDWPAC) may use an electronic deduction authorizations. These nonfilers occurred with the post- signature system to authorize protocols included: general election report, where payroll deduction contributions nonfilers dropped from 252 in 1998 from its restricted class.1 The • The use of individual passwords to 128 in 2000, a 49 percent de- electronic signature system will be for each employee; crease. part of a Web site that uses the • The use of confirmation e-mail Additional details are available in standard “click through” process messages sent after the submission a news release dated April 25, 2001. that forms the basis for much of of the deduction authorization; and The release is available: Internet commercial activity. • The ability of contributors to modify or revoke their authoriza- • On the FEC Web site at http:// When a payroll deduction or tions. www.fec.gov/news.html; and other check-off process is used to • From the Public Records Office collect contributions for a separate (800/424-9530, press 3) and the segregated fund (SSF), the contribu- SSF’s Web site and the “Click- Press Office (800/424-9530, press tor must provide an affirmative through” Process 5).✦ authorization in order to permit the In this case, MSDWPAC’s deduction.2 The specific and volun- proposed Internet Web site incorpo- tary intent of the solicited employee rates the features mentioned above. Use of Civil Money Penalty must be manifested in a written The site operates as follows: Funds from the Administrative authorization before the actual 1. The first page the user sees Fine Program deduction of any contributions. See contains a login screen that AO 1997-25. Such authorizations Funds collected from civil money requires the user to enter a are often made through the use of a personally-unique employee penalties assessed under the Admin- paper payroll deduction form, where istrative Fine Program are not identification number. This the employee designates the amount number will be checked against a received or used by the Federal to be deducted and then indicates Election Commission. Instead, database of eligible restricted his assent via signature. The signa- class members. Only those users respondents (those who have ture is required as a unique identifier whose identification number is violated the law) send funds to a of the employee, and it also indi- special government “lockbox” verified as belonging to a mem- account. While respondents are ber of the restricted class will be directed to make checks, cashiers’ 1 The “restricted class” personnel of a permitted to access the Web site checks or money orders out to the corporation consists of the and proceed to the next series of Commission, the checks are depos- corporation’s executive and adminis- trative personnel and its stockholders. Web pages. ited into the “lockbox” account and The families of these personnel are also 2. When the user then clicks on a then forwarded to the Department of included. See 2 U.S.C. §441b(b)(4)(A) screen option from a menu list to the Treasury. Moneys collected (i), 11 CFR 114.1(c)(1), 114.1(j) and make a “pledge,” a series of under the Administrative Fine 114.5(g)(1). screens appears, which requires Program do not affect the 2 See Federal Election Commission v. the user to verify his home Commission’s appropriation or National Education Association, 457 address, occupation and e-mail budget. Fines that remain uncol- F.Supp. 1102 (D.D.C. 1978), where the address. The e-mail address lected are forwarded to the Depart- court determined that a reverse check- screen ensures that the user will ment of the Treasury for collection, off procedure to collect contributions be sent an e-mail confirming his as required by the 1996 Debt resulted in involuntary contributions to contributions. As before, all of Collection Improvement Act.✦ an SSF.

6 June 2001 Federal Election Commission RECORD

the above information must be While the Commission has not at the State level, as determined by provided and is checked against previously considered the “click the Commission.” 2 U.S.C. the database for restricted class through” process for contributions §431(15). In order to achieve state employees; this information must made to an SSF, it has previously committee status under Commis- be correctly matched before approved situations where this sion regulations, an organization access is given to the subsequent method was used to make contribu- must meet two requirements. It must steps in the authorization pro- tions to Presidential candidate have: committees. See AOs 1999-9 and cess. • Bylaws or a similar document that 1999-22. Furthermore, while past 3. After the entry of the user’s e- “delineates activities commensu- opinions on Internet contributions mail address, the next screen rate with the day-to-day operation” provided a safe harbor for the gives the user the opportunity to of a party at a state level; and security measure a political commit- specify the amount he wishes to • Ballot access for at least one tee could adopt, once basic security contribute. A statement on the federal candidate who has quali- and verification concerns were fied as a candidate under Commis- screen informs the user that the addressed, these opinions did not sion regulations.2 suggested guideline is merely a purport to restrict or delineate the suggestion and that the contribu- specific type of technology that The Green Party of Maryland tor is under no obligation to must be used. See AOs 1999-9 and meets both requirements. It satisfies follow it or to make a contribu- 1999-3. Therefore, MSDWPAC’s the first requirement because its tion at all. proposed method of accepting bylaws set out a comprehensive 4. The final page of the Web site restricted class payroll deduction organizational structure for the party presents the last step of the authorization is permissible. from the statewide level down deduction authorization process. Date Issued: April 19, 2001; through local levels, and the bylaws On this page, the user is required Length: 5 pages.✦ clearly identify the role of the Green to review a series of Commis- Party of Maryland. sion-required affirmation state- The Green Party of Maryland ments.3 The screen presents the AO 2001-6 satisfies the second requirement— user with the following state- Status of State Party as State ballot access for a federal candi- ment: “By entering your full Committee of Political Party date—in that one individual who name below you are agreeing to The Green Party of Maryland had met the requirements for all of the above items,” and then satisfies the requirements for state becoming a federal candidate gained provides a space for the user to committee status.1 ballot access as a candidate of the type his name. Clicking the The Federal Election Campaign Green Party of Maryland in 2000. “submit” icon provides the Act (the Act) defines a state com- This was Ralph Nader as the Party’s candidate for President. electronic signature of the user.4 mittee as “the organization which, by virtue of the bylaws of a political Date Issued: May 7, 2001; ✦ party, is responsible for the day-to- Length: 4 pages. day operation of such political party 3 These disclaimers include an acknowl- edgment that the user is a U.S. citizen or permanent resident alien, and the 1 The Commission notes the description and statements regarding the Party’s recognition of the political purpose of (continued on page 8) the PAC and the uses of contributions relationships with the national Green made to the PAC. The affirmation Party organizations. However, the 2 An individual becomes a candidate for statements also attest to the user’s requester has not posed any questions the purposes of the Act (2 U.S.C. willingness to make the contribution as to the Party’s affiliated status with §431(2)) once he or she receives and that the contribution is not made these organizations. Therefore, this contributions aggregating in excess of with corporate treasury funds or opinion does not address issues $5,000 or makes expenditures in excess through a business credit card. regarding the application of the Act or Commission regulations to the possible of $5,000. Federal candidates must 4 The Commission also concluded that a affiliation of the Maryland Green Party designate a principal campaign second electronic signature method for with any other political committee or committee within 15 days after qualify- the last page on the Web site (where organization within the Green party ing as a candidate, and the committee users view the appropriate disclaimers) movement at the local, state or national also becomes subject to registration was permissible. This method required levels. See 2 U.S.C. §§433(b)(2), and reporting requirements. 2 U.S.C. the user to also type his or her Social 441a(a)(5)(B); and 11 CFR 110.3(b), §§432(e)(1) and 434(a); 11 CFR 102.1 Security number below his or her name. 110.3(c)(1). and 104.1.

7 Federal Election Commission RECORD June 2001

Advisory Opinions tee (Friends for Fasi); specifically, market rental rates for space at the (continued from page 7) the contributions resulted from Cultural Plaza between January Advisory Opinion Requests Longevity discounting the rent for 1994 and November 1996. The space in Longevity-owned property, Commission subsequently, on the Chinese Cultural Plaza Shopping December 29, 1999, entered into a AOR 2001-7 Center (Cultural Plaza) used by Mr. conciliation agreement3 with Affiliation of a PAC, sponsored Fasi’s campaign.1 Longevity in which Longevity by a limited liability company, with Longevity is a Hawaii corpora- admitted the violation, agreed not to SSFs of the companies that are tion. All of the original shareholders engage in any similar activity in the members and owners of the limited of Longevity were foreign nationals future and paid a civil money liability company (Nuclear Manage- and residents of the Republic of penalty of $75,000. ment Company PAC, April 12, China. All but one of the members 2001) of Longevity’s original board of FEC v. Friends for Fasi: Acceptance of Prohibited AOR 2001-8 directors were executives of China Contributions Campaign committee’s purchase Airlines, Ltd. (CAL), a foreign On the same date that the Com- of candidate’s book for distribution corporation. As a result, foreign 2 mission found probable cause that to campaign contributors (Senator nationals initially held absolute Longevity made prohibited contri- Arlen Specter; May 16, 2001)✦ control and direction over the composition of Longevity’s board of butions, it found probable cause that directors. Through 1996, Longevity Mr. Fasi and Friends for Fasi was owned, managed and/or con- accepted prohibited contributions. Court Cases trolled by foreign nationals. Foreign Mr. Fasi and Friends for Fasi did not national participation in Longevity’s enter into a conciliation agreement, so the Commission filed a civil FEC v. Friends for Fasi; management included approving leases at the Cultural Plaza. complaint on January 12, 2000, MUR 4594 In MUR 4594, the Commission, alleging that Frank Fasi and Friends On January 19, 2001, the U.S. on September 14, 1999, found for Fasi had violated §441e of the District Court for the District of probable cause to believe that Act, which prohibits the making and Hawaii found that Friends for Fasi Longevity, controlled by foreign accepting of foreign national violated the Federal Election nationals, made prohibited in-kind contributions in connection with any Campaign Act (the Act) by accept- contributions to Friends for Fasi and election to a U.S. public office. ing foreign national contributions. 2 Frank Fasi in the form of below- On June 6, 2000, the U.S. District U.S.C. §441e. This case grew out of Court for the District of Hawaii an enforcement matter, MUR 4594, granted in part and denied in part defendants’ motion to dismiss the in which the Commission and 1 Frank Fasi had a written lease with Longevity International Enterprises Longevity from January 1981 through Commission’s January 12 civil (Longevity) had signed a concilia- February 1984, and he was a month-to- complaint. Among other things, tion agreement concluding that month tenant thereafter, with no written defendants had argued that 2 U.S.C. Longevity violated the law by lease, until November 1996, when the §441e did not apply to contributions making prohibited contributions in premises were vacated. Mr. Fasi’s to nonfederal elections. The court connection with an election to a written lease provided for a base rent of rejected defendants’ argument, U.S. public office. 2 U.S.C. more than $1,500 per month. However, finding the Commission’s interpre- §441e(a) and 11 CFR 110.4(a). Friends for Fasi, who made all the rental payments, paid only $800 per MUR 4594: Prohibited Foreign month for that space. (The rent varied National Contributions from April 1996 until November 1996.) 3 Once the Commission determines According to Longevity, Mr. Fasi and probable cause, it is required, for a Frank Fasi served as Mayor of Friends for Fasi were the only tenants Honolulu from 1968 through 1980 period of at least 30 but not more than to rent space in the Cultural Plaza 90 days, ”to correct or prevent” the and from 1984 through 1994. He without a written lease. also campaigned for the office of violation “by informal methods of 2 conference, conciliation, and persua- governor in 1994 and the office of A foreign national is an individual who is not a citizen of the United States sion, and to enter into a conciliation mayor in 1996. The prohibited agreement with any person involved.” contributions in question were in- and who is not lawfully admitted for permanent residence, as defined by 8 §437g(a)(4)(A)(i). The full complaint kind contributions to Mr. Fasi and CFR 1101(a)(20). See also 2 U.S.C. procedure can be found at 2 U.S.C. his 1996 mayoral campaign commit- §441e(b). §437g.

8 June 2001 Federal Election Commission RECORD

tation of §441e to be consistent and paign Act (the Act) whose restric- ment rights without a compelling reasonable.4 tions flow from these provisions — state interest. See the May 2001, On January 19, 2001, the U.S. against North Carolina Right to Record, page 6. The March 6, 2001, District Court for the District of Life, Inc., (NCRL), a non-profit, appeal is still pending. Hawaii, signed a consent judgment, MCFL-type corporation.1 In its U.S. Fourth Circuit Court of in which the court: order, the Court wrote: “Assuming Appeals, 2:00-cv-2-BO(2).✦ that we reverse the district court’s • Found that Friends for Fasi final judgment, we conclude that the violated the ban on contributions FEC will not be precluded from On Appeal from foreign nationals by accept- enforcing the challenged provisions ing the discounted rental space with respect to NCRL’s conduct Ralph Nader, et al. v. FEC from January 1995 to November during the life of the preliminary On April 30, 2001, the U.S. 1996; injunction.” Supreme Court denied plaintiffs’ • Ordered Friends for Fasi to pay a The Commission’s December 22, petition for a writ of certiorari to $15,000 civil money penalty; and 2000, appeal had previously been review a decision by the U.S. Court • Permanently enjoined Friends for consolidated with its March 6, 2001, of Appeals for the First Circuit Fasi and its agents, employees, appeal of the District Court’s final upholding the FEC’s Debate Regu- attorneys, including Frank F. Fasi, judgment that the prohibitions on lations. Petitioners had asked for the from accepting “something of corporate contributions and expen- Debate Regulations to be set aside, value from a foreign national at ditures of the Act and Commission arguing that the regulations were in less than market value in connec- regulations were unconstitutional as excess of the FEC’s statutory tion with U.S. elections for public applied to NCRL. The court found authority under the Federal Election office.” that the statute and regulations Campaign Act. This case, originally See also the August 2000 Record, infringed on NCRL’s First Amend- filed as Becker v. FEC, was covered p. 14, and the March 2000 Record, in the November 2000, Record, p. 8, p. 9.✦ and in the April 2001, Record, p. 1 In FEC v. Massachusetts Citizens for 8.✦ Life (MCFL) 479 U.S. 238 (1986), the Christine Beaumont v. FEC Supreme Court concluded that 2 U.S.C. §441b could not constitutionally On April 23, 2001, the U.S. Court prohibit certain nonprofit corporations Publications of Appeals for the Fourth Circuit from making independent expenditures. dismissed as moot a December 22, MCFL was exempt from this ban 2000, Commission appeal that had because it had the following features: Disclosure Directory of requested relief from a preliminary • It was formed to promote political Federal and State Election injunction of the U.S. District Court ideas and did not engage in business Offices Available for the Eastern District of North activities; Carolina, Northern Division. That • It did not have shareholders or other The Combined Federal/State persons who had a claim on its Disclosure and Election Directory preliminary injunction, issued on assets or earnings, or who had other October 26, 2000, barred the 2001 is now available. This annual disincentives to disassociate publication provides information on Commission from relying on, themselves from the organization; enforcing or prosecuting violations and the national and state agencies of 2 U.S.C. §441(b) and 11 CFR • It was not established by a business responsible for the disclosure of 114.2(b) and 114.10—or any other corporation or labor union and had campaign finances, lobbying, parts of the Federal Election Cam- a policy of not accepting donations personal finances, public financing, from such entities. candidates on ballots, election Commission regulations at 11 CFR results, spending on state initiatives

4 114.10 incorporate the MCFL decision. and other financial filings. The Court granted the motion to These regulations establish a test to dismiss in part by ruling that any The publication, which includes determine whether a corporation violations that took place before agency e-mail and Internet ad- qualifies for exemption from the Act’s dresses, is also available on the January 12, 1995, were beyond the prohibition against corporate indepen- statute of limitations. It denied the Commission’s Web site, dent expenditures. motion in part by ruling that each www.fec.gov. Located in the rental payment constituted a separate “Elections and Voting” section, this violation, so that any payments that were discounted after January 12, 1995, constituted violations. (continued on page 10)

9 Federal Election Commission RECORD June 2001

Publications and to support recently-developed that this conference is not for trade (continued from page 9) programs, such as Mandatory associations, which have rules Electronic Filing, Administrative unique to them.) interactive version provides Fines, state waivers and Alternative The conference, which will be hyperlinks to allow viewers to Dispute Resolution.✦ held in the Washington, DC area, directly access the home pages of will cover the basic provisions of the state and federal agencies listed. the federal election law and explain This version of the publication will the rules governing participation of be updated periodically throughout Reports labor and membership organizations the year. The Directory is also and their political action committees available on 3.5” diskette. Paper Commission Certifies Arizona (PACs). Workshops will also copies, which are free, may be address the new electronic filing obtained by calling the Public for State Filing Waiver requirements, and a representative Records Office at 800/424-9530 On April 30, 2001, the Commis- ✦ from the IRS will be available to (press 3) or 202/694-1120. sion certified that Arizona qualified answer election-related tax ques- for a state filing waiver.1 Conse- tions. quently, federal committees and candidates in Arizona no longer Registration Budget have to file copies of their federal The conference registration fee is reports with the Arizona Office of $375. A late registration fee of $10 Commission Submits Budget the Secretary of State. The first will be added effective May 26. Proposal for 2002 report affected by the waiver was Conference registrations are the 2001 May Monthly Report.✦ accepted on a first-come, first-serve On March 29, 2001, the Commis- basis. Attendance is limited, and sion sent its fiscal year 2002 budget FEC conferences regularly sell out, proposal to Congress and the Office so please register early. Individuals of Management and Budget (OMB). Outreach may register for the conference on The proposal requests $47.67 line at Sylvester Management million and 375 personnel for FEC Corporation’s secure Web page at operations. In prior negotiations, the Conference for Labor and OMB had recommended $41.4 Membership Organizations million and 357 personnel as the On June 11-13, the Federal Commission’s 2002 appropriation. Election Commission will hold a Public Appearances The Commission’s appropriation for conference tailored to meet the 2001 is $40.41 million and 357 specific needs of labor and member- June 5-8, 2001 personnel. ship organizations. (Note, however, International Foundation for In a letter accompanying the Election Systems formal request, Commission Chair- Mexico City, Mexico man Danny L. McDonald explained, 1 The Commission has certified that the Vice Chairman Mason “While the FEC is aware of the following states and territories qualify general budgetary climate and has for filing waivers: Alabama, American June 7, 2001 striven to reach agreement with Samoa, Arizona, Arkansas, California, Aristotle OMB on our budget request, we did Colorado, Connecticut, Delaware, Washington, DC Florida, Georgia, Hawaii, Idaho, Kate Miller not reach agreement for the FY Illinois, Indiana, Kansas, Kentucky, 2002 request. Therefore, we must Louisiana, Maine, Maryland, Michigan, independently make a special appeal Minnesota, Mississippi, Missouri, June 21, 2001 to pursue the staff and resources Nebraska, Nevada, New Hampshire, American League of Lobbyists necessary to fulfill our statutory New Jersey, New Mexico, New York, Alexandria, Virginia mission. And, depending upon the North Carolina, North Dakota, Ohio, Liz Kurland scope of campaign finance reform Oklahoma, Oregon, Pennsylvania, legislation under consideration, the Rhode Island, South Carolina, South June 28-29, 2001 FEC could face significant addi- Dakota, Tennessee, Texas, Utah, Center for Alternative Dispute tional resource needs.” The addi- Vermont, Virginia, Virgin Islands, Resolution tional funds and personnel could be Washington, West Virginia, Wisconsin Washington, DC and Wyoming. Committees that file Allan Silberman used to expand the Commission’s their reports at the FEC need not file Office of Election Administration copies in these states.

10 June 2001 Federal Election Commission RECORD

www.fec.gov/pages/ problem of significant concern to a Advisory Opinions infosvc.htm#Conferences or by portion of the U.S. public.” Four Alternative disposition of 2001-5, calling Sylvester Management criteria are used to evaluate each 5:6 Corporation at 800/246-7277.✦ application: originality of the 2000-24: Preemption of state approach, effectiveness in address- election law mandating fixed ing important problems, value of allocation ratio for administrative services to clients and the potential and voter drive expenses, 2:2 Commission for replication in other jurisdictions. 2000-27: Status of party as state Fifteen finalists will be selected committee, 3:6 FEC Semi-Finalist in in late May. The National Selection 2000-28: Disaffiliation of trade “Innovations” Competition Committee will select five winning associations and their PACs, 2:3 programs after a full day of presen- 2000-30: Nonconnected PAC’s The Federal Election Commis- tations on October 17, 2001, in receipt and use of securities, 5:1 sion has been designated one of 99 Washington, DC. Each of the 2000-32: Reporting uncollectable semi-finalists from some 1,300 winning programs will receive a loan, 1:9 applicants in the “Innovations in $100,000 award, and remaining 2000-34: Name and acronym of American Government” award finalists will receive $20,000. There SSF, 2:5 competition sponsored by the Ford were 1,298 applicants from which 2000-35: Status of party as state Foundation and administered by the 99 semi-finalists were chosen. committee, 1:10 Harvard University’s John F. Commission Chairman Danny L. 2000-36: Disaffiliation of Kennedy School of Government. McDonald said of the FEC’s nonconnected PACs, 2:5 The recognition highlights the recognition, “The Commission is 2000-37: Use of campaign funds to success of the FEC’s “State Filing proud of this accomplishment as purchase and present Liberty Waiver Program.” Initiated in 1999, well as the innovative people who Medals, 2:6 the program eliminates the need for conceived and implemented it. 2000-38: Registration of party the administration of paper filings of Although the entire agency undoubt- committee due to delegate campaign reports at the state level edly is gratified by this honor, we expenses, 2:7 by replacing such paper filings with enthusiastically share it with the 2000-39: Status of party as state an Internet-based system of elec- states and territories participating in committee, 2:8 tronic access to reports filed with the State Filing Waiver Program. 2000-40: Donations to legal defense the Commission. Since candidates They readily offered the public fund of Member of Congress, 3:7 for federal office are required by easier access to government’s 2001-1: Use of political party’s law to file campaign reports with the electronic information portals, office building fund to pay FEC, and those reports are rapidly which leads to increased public building renovation costs and posted on the Commission’s Web awareness and participation in the fundraising expenses of building site (www.fec.gov), the Commission process. Every government offi- fund, 4:5 felt it costly and redundant for states cial—local, state or federal—should 2001-2: Status of party as state to continue processing the federal be pursuing this goal.”✦ committee, 4:6 reports. 2001-3: Use of campaign funds to To implement the waiver pro- purchase an automobile for gram and encourage state participa- campaign purposes, 5:5 tion, the Commission offered to Index 2001-4: Use of electronic signatures provide computer equipment, for PAC contributions by payroll Internet capability and training for deduction, 6:6 state personnel. In December 1999, The first number in each citation refers to the “number” (month) of 2001-6: Status of party as state 12 states applied and received committee, 6:7 certification into the program. The the 2001 Record issue in which the total number of state offices certi- article appeared. The second Compliance fied to date is 48. Thirty-five states number, following the colon, Committees fined under Administra- have accepted the Commission’s indicates the page number in that tive Fines Program, 2:6, 4:7, 5:7, offer to provide computer equip- issue. For example, “1:4” means 6:5 ment. that the article is in the January To qualify for an Innovations issue on page 4. award, government programs “must involve a fresh approach to a (continued on page 12)

11 Federal Election Commission RECORD June 2001

Index (continued from page 11) MUR 4594: Prohibited Foreign Regulations National Contributions, 6:8 Advanced Notice of Proposed MUR 4762: Prohibited union Rulemaking on definition of contributions and other violations, “political committee,” 4:1 2:9 Notice of Proposed Rulemaking on MUR 5029: Contributions in the reporting of independent expendi- name of another made by corpora- tures and last-minute contribu- tion and government contractor, tions, 6:1 2:10 Final rules for general public political communications coordi- Court Cases nated with candidates and party _____ v. FEC committees; independent expendi- – Beaumont, 2:8, 3:2, 5:6, 6:9 tures, 1:2, 6:3 – Buchanan, 1:10 – DNC, 2:8. 3:2 Reports – Dole, 5:6 Amendments to Statements of – Miles for Senate, 3:3 Organization, 2:1 – Nader, 4:8, 6:9 Arizona state filing waiver, 6:10 – Natural Law Party of the United California special election, 3:5 States of America, 1:10, 2:8, 3:2 Committees required to file tax FEC v. _____ returns, 3:4 – Friends for Fasi, 6:8 Nevada state filing waiver, 2:2 Other Pennsylvania special election, 4:5 – Hooker v. All Campaign Con- Reports due in 2001, 1:4 tributors, 1:10 Virginia special election, 5:6 – Hooker v. Sundquist, 4:8

FEDERAL ELECTION COMMISSION 999 E Street, NW Presorted Standard Washington, DC 20463 Postage and Fees Paid Federal Election Commission Permit Number G-31 Official Business Penalty for Private Use, $300

Printed on recycled paper