FEDERAL ELECTION COMMISSION September 1992 999E Street NW Washington DC 20463 Volume 18, Number 9 most nonfederal campaigns are subject to less stringent recordkeeping and reporting requirements than those imposed under federal law~ their accounts may contain a constantly varying mixture of permissible TRANSFERS F1U'l ~ERAL CAMPAIGNS and ill'lpEirmissible funds; and their fund­ PIOIIBI'l'ED AFl'ER 1992 ELECTICfiS raising expenses are often paid for with On August 6, 1992, the Conunission multiple disbursements over the course of approved a final rule that prohibits several days. Consequently, the draft transfers of funds and assets from a (continued) candidate's nonfederal campaign to his or her federal campaign. This rule will not - become effective, however, until after the TABLE OF <Dll'llNl'S 1992 election cycle. The new regulation at 11 CFR 1l0.3(d) BmULM'IWS replaces the current regulation at 11 CFR 1 Transfers from Nonfederal Campaigns 110.3(c){6), which perrrcits nanfederal to 2 Transfers Between Federal Campaigns federal campaign transfers as long as the 3 Candidate Names Used in Special Projects transfers do not contain any contributions 4 Final Regulation on Rulemaking Petitions that are impermissible under the Federal Election Campaign Act (the Act) • PUBLIC PUNDIm The regulation and its Explanation and 4 Clinton, Bush Each Receive $55 Million Justification were published in the Federal in Public Funds Register on August 12 (57 FR 36344). The 5 August Matching Fund payments rule was sent to Congress on August 7. 5 Final Repayments: 1988 Kemp and Bush­ After the rule has been before Congress for Quayle Campaigns 30 legislative days, the Commission will announce the effective date. 2 U.S.C. REJ?ORl'S §438(d) • 6 Reports Due in Coming Months 8 Florida Runoff Date Changed Background The final rule grants a petition for 8 STATISTICS: Midyear PAC Count rulemaking filed by Congressman William Thomas (RICA), who alleged that the current; 8 AINISlJRY OPINICES regulation fails to prevent nonfederal cam­ paigns from using impermissible funds to 10 800 LINE: Staff Advances raise permissible contributions that are then transferred to federal campaigns. COORT CASES In response, the COmnUssion published a 11 FEe v. Eldredge for Congress Committee Notice of Proposed Rulemaking seeking 11 FEC v. International Funding Institute comments on draft rules that would have required a nonfederal campaign to exclude a 13 fEDERAL RmISTER OOI'ICES contribution from the amount transferred if it resulted from a fundraising actiVity CCIIPLIANCE financed with impermissible funds. Under 13 Nonfilers the proposed rule, nonfederal campaigns 13 MURs Released to PUblic would have had to be able to demonstrate that the funds to be transferred were 15 INDEx: raised with funds permissible under federal law. 16 PUBLIC APPFARANCES The Commission saw that it would be difficult for nonfederal campaigns to link 16 II'fFORlIIM'Im: New IRS Phone Numbers funds to be transferred with particular fundraising disbursements, given that: ; September 1992 FEDERAL ELECTION COMMISSION Volume 18, Number 9 rules would have been difficult for the PBOPOSED ROLES ~ TRANSFERS BE'lWEI!N Commis~ion to monitor and enforce. FEDERAL CMPAIGNS In light of these anticipated practical The FEe seeks comments on proposed difficulties, the Notice also sought com­ rules that would amend the current regula­ ments on an alternative approach: To ban tions on transfers of funds between a all transfers from nonfederal campaigns. federal candidate's committees authorized All of the commenters who supported a rule­ for different election years or for making in this area preferred a total ban, different offices (11 eFR 110.3(c)(4) and and this is the approach the Commission (c}(S»). The proposed rules would add new adopted in its final rule. requirements to such transfers. First, the Although the revised rule reverses a transferring commdttee would have to inform long-standing policy of permitUng non­ donors of its intent to transfer their federal transfers, the total ban will more contributions. Additionally, the committee effectively prevent the indirect use of would be permitted to transfer only those imper.missible funds in federal elections, contributions whose donors provided written an area in which the Commdssion has authorization for the transfer; other recently engaged in closer regulation. contributions would have to be excluded. The authorizations would operate as Final ltUle redesignations of contributions for another The final rule, as explained earlier, election under 11 CFR 110.1(b)(5)(iii). prohibits transfers of cash and other Comments are also sought on an alterna­ assets from a candidate's nonfederal tive to the "affirmative authorizationll campaign committee (or account) to his or draft rule. under the altemative , the her federal campaign commdttee. The rule comrndttee would still have to notify donors does not, however, prohibit the sale of but would be permitted to transfer the assets by the nonfederal campaign to the contribution of any donor who did not federal campaign as long as the assets are object to the transfer. The Commission sold at fair market value. (Committees may asks cammenters to consider questions ll consult 11 CFR 9034.5(c)(1) for guidance in raised by the I1no objection approach: determining fair market value.) A federal Should the transferring committee be campaign may, for example, purchase the required to give contributors a minimum nonfederal campaign's mailing list at fair amount of time to object? If so, how long? market value. Written comments on the proposed rules The final rule also provides that a are due on September 11, 1992. The Notice nonfederal campaign may, if it wishes, make of Proposed Rulemaking was published in the refunds to its donors and make arrangements Federal Register on August 12, 1992 (57 FR wi th the candidate's federal campai9I\ for 36023). the solicitation of the same donors by the federal campaign. All solicitation costs, however, Imlst be paid by the federal campaign. Federal Election Cc:mInission, 999 E street, Nf, washin¢on, DC 20463 800/424-9530 202;119-3420 202/219-3336 (TOO) Joan D. Aikens, Chairman walter J. Stewart, Secretary of the Senate, Scott E.. 'lbomas, Vice Chairman Ex Officio Commissioner Lee Atm Elliott Donn8ld It. Anderson, Clerk of the House of Danny L.. McDonald Representatives, Ex Officio Commissioner John Warren MeGany Trevor Potter 2 September 1992 FEDERAL ELECTION COMMISSION Volume 18, Number9 MN 00 USE OF CANDIMTE 1W'IES IN Notice of Proposed Rulemakiog SPECIAL PROJECT TITLES In response to these concerns, the The commission recently approved a agency sought "comments on proposed regula~ revised regulation that prohibits tions that would have: (1) required an unauthorized political co~tteesll from unauthorized committee to use a more info~­ using candidate names in the titles of mative disclaimer for a special fundraising special projects and other communications. project using a candidate's name in the Note that this rule will not become effec­ title; and (2) required that checks given tive until after the i992 election cycle. in response to the solicitation be made The Federal Election Campaign Act and payable to the unauthorized comni ttee's FEC regulations prohibit an unauthorized registered name. (See 57 Fa 13056, April commi. ttee from including the name of a 15, 1992.) Neither of these proposals were candidate in its own "name." 2 U.S.C. included in the final rule. §432(e)(4)i 11 CrR l02.14(a). The revised rule at 11 CPR 102.14(al defines "name" to Commission Decision include "any name under which a committee Rather, the final rule bans the use of conducts activities, such as solicitations candidate names in the titles of all or other communications, including a communications by unauthorized committees. special project name or other designation." The agency views thts approach as more The revised regulation and its EXplana­ responsive to the problems at issue and tion and Justification were published in easier to monitor and enforce than the the Federal Register on July 16, 1992 (52 restrictions in the proposed rules. FR 31424). After the rule has been before While comments from unauthorized com­ Congress fa' 30 legislative days, the mittees opposed tightening the rules on the Commdssion will announce the effective use of candidate names, the record supports date. 2 U.S.C. §438(d). The agency plans the Commission's decision. For exarople, a to set an effective date of November 4, comment feom a Presidential campaign stated 1992 (the day afte~ the general election). that an unauthorized project raised over $10 million despite the candidate'S dis­ Background avowal of the activities. A recent televi­ The Comadssion had previously inter­ sion documentary (now placed on the rule­ preted section 432(e)(4) as applying only making record) reported that a political to a committee's registered name on its action comndttee raised $9 million in Statement of organization and had thus numerous projects whose titles included permitted an unauthorized comrrdttee to candidates' names; none of the funds went solicit contributions for itself under a to the named candidates. Proqram investi­ special project name that included the name gators found that elderly people wer-e of a candidate (e.g. "Americans for Doe"). particularly vulnerable to being misled In Common Cause v. FEC, 842 F.2d 436 into believing they were contributing to (D.C. Cir. 1988), the court of appeals the candidates named in the titles. upheld the commission's authority to inter­ pret section 432(e)(4) in this fashion, Proposed Revision to Disclaimer Rule recognizing, however, that a more extensive Postponed ban on the use of a candidate's name would The Commission decided to reserve also be a reasonable interpretation. action on another change that had been The Conuuon cause decision grew out of included in this rulemaking.