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Federal Election Commission Weighing Rules On PAC Contributions

November 17, 1987

WASHINGTON (AP) _ The Federal Election Commission is looking into a case whose outcome could expand the controversial practice of ″bundling,″ described by critics as a way to evade campaign contribution limits.

In the fine-line world of campaign finance regulation, a query put to the commission by an insurance industry group presents a new twist.

The group is seeking clarification of how deeply corporations can become involved in federal campaigns. The FEC’s decision, expected in the next two weeks, could have implications for all companies, trade associations and unions that sponsor political action committees.

In general, the law forbids corporations and labor unions from spending money on federal elections. They can, however, set up political action committees which then separately raise money to give to candidates.

And a company can encourage its executives and managers to support the PAC, which may give a maximum $5,000 per election to any one candidate.

An arm of the incorporated National Association of Life Underwriting wants to take the arrangement a step further, giving its members a list of endorsed House and Senate candidates and asking them to donate to those individuals through the PAC, the Life Underwriters Political Action Committee.

The group proposes recommending different candidates to different contributors, presumably to ensure that all of its endorsed candidates get some money.

The PAC then would ″bundle″ the contributions and pass them along to the candidates, without having the contributions count against the PAC’s $5,000 limit.

Bundling itself has been upheld in some situations as a legal way to circumvent the $5,000 per-candidate limit, with the FEC ruling that such PACs are merely conduits for individual donations from the contributors.

But the question in the insurance group’s case is whether it is permissible to infuse corporate money into the process by paying for solicitation materials such as a list of endorsed candidates that would be distributed to employees along with information on how to use the PAC as a conduit.

The arrangement, still under review by the FEC, has raised the hackles of PAC critics.

″It would take it further than PACs have been allowed to go in the past,″ said Fred Wertheimer, president of the liberal activist group Common Cause. ″One, the use of corporate money. And the second (problem) is the way of directing the money.″

Wertheimer said the bid to expand bundling ″is an effort to open the door even wider to PAC influence in Congress ... The PAC would be much more clearly and effectively directing virtually unlimited sums to candidates. It would effectively wipe out the contribution limits.″

Also objecting to the plan is the Democratic Senatorial Campaign Committee. It director, Bob Chlopak, conceded that the committee’s concern centers in no small part on corporate PACs’ traditionally greater support for Republican candidates than for Democrats.

DSCC attorney Bob Bauer said the bundling proposal is part of continual ″chipping away at the election law″ in an effort ″to expand corporate giving.″

The insurance group’s attorney, Jan Baran, said the organization went to the FEC for a go-ahead because it wanted to avoid any future problems with its fund-raising plan. But Baran said if the issue becomes too controversial, the insurance group may just scrap the idea and come up with something else.

″We thought we were being good citizens″ in seeking permission first, he said.

A discussion at an FEC meeting last week indicated the proposal will have problems getting through the six-member commission.

Chairman Scott Thomas contended that the proposal would combine two permitted activities - the corporation’s campaign recommendations to members, and the PAC’s right to bundle donations - but their combination becomes a violation. He said the insurance association should be allowed to provide its members with the addresses of candidates it endorses and encourage contributions, but not specifically direct the money to LUPAC because that would amount to facilitating the contributions through expenditure of corporate funds.

Commissioner Thomas Josefiak said the association’s plan to recommend specific candidates to particular donors in effect amounts to corporate control of the resulting contribution.

″Such directed communication efforts are beyond simply partisan expressions of the organization’s views, but rather, constitute deliberate techniques to achieve a predetermined outcome of contributions,″ Josefiak said.

The commission, in its meeting last week, told its legal staff to gather more specifics on the insurance group’s proposal so that commissioners can vote on it at a coming meeting.

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