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2007-4: Expenditures Will Be Attributed to an Election Based on Their Underlying Purpose

Wednesday, 05/09/2007
Wednesday, May 9, 2007

Re: New York City Administrative Code (“Admin. Code") §§ 3-703(1), (14); 3-705(8), 3-706(2), (2-a); 3-716; New York City Campaign Finance Board Rules 1-04(f), (h); 1-05(h); 1-07(c), (d); 1-08(c)(1), (3), (d), (l), (o); 3-02(f)(5); 4-01; 5-01(n)(1); and Advisory Opinions Nos. 1989-9; 1993-7; 1996-2; 1997-6; 1999-5; 2000-7; 2007-3; Op. No. 2007-4.

The New York City Campaign Finance Board (the “Board") has received a request for an advisory opinion from counsel to Congressman Anthony D. Weiner.1 Mr. Weiner intends to seek re-election to the House of Representatives in the 2008 federal elections and to explore a possible run for mayor of New York City in 2009. He has formed a congressional committee, Friends of Weiner, as well as a second committee, Weiner '09, to support his mayoral campaign.2 The federal and mayoral committees will be separate organizations, have different treasurers, and maintain separate bank accounts, but will share certain personnel and consultants as well as supplies, equipment, and office space. For the purposes of this opinion, it is assumed that Mr. Weiner will join the Campaign Finance Program (the “Program") for the 2009 mayoral elections.

Mr. Weiner seeks guidance concerning the Board's attribution of expenditures to the federal and city elections, and proposes a standard for attributing expenditures to an election, where, as here, a candidate is simultaneously seeking election to a federal office and an office subject to the Campaign Finance Act (the “Act"). The advisory opinion request also includes: (i) a suggested typology for specific expenditures anticipated by Mr. Weiner's respective committees; and (ii) a recordkeeping methodology for preapproval by the Board.

1. Attributing Expenditures to Elections

Pursuant to Rule 1-08(c)(1), expenditures are presumed to be for a candidate's next election, except that post-election expenditures incurred prior to January 1 in the year following the election, in the case of a federal election, are presumed to be for the candidate's previous election.3 This presumption simplifies a candidate's reporting by reducing the uncertainty surrounding the attribution of expenditures that may to some degree benefit the candidate in more than one election. However, in applying this presumption, the Board must balance this important purpose with the need to ensure accurate public disclosure of expenditures and, most especially, equitable application of the expenditure limits.

The advisory opinion request proposes a standard for applying the Board's presumption to expenditures incurred by Mr. Weiner's congressional committee. This standard is intended to resolve “potential conflicts between federal and city law" that are said to be the result of the interplay between the federal requirements for the attribution of expenditures that apply to Mr. Weiner's congressional committee and the Board's presumption under Rule 1-08(c)(1).4 Under the proposed standard, Mr. Weiner need only demonstrate that an expenditure was not “referable solely" to his later, mayoral campaign in order to attribute the expenditure solely to the federal election. The standard suggests that even an expenditure primarily intended to further his mayoral campaign could be attributed solely to his congressional committee if the expenditure “referred" to the federal election.

The Board finds this standard to be inconsistent with the presumption contained in Rule 1-08(c)(1), and declines to adopt it.5 By so narrowly construing this presumption, the standard would severely limit the Board's ability to enforce the expenditure limits and would therefore substantially weaken the Program as a whole.

As contemplated by the rule, the Board would consider an expenditure to be for the 2009 election if its purpose was to benefit a candidate's later rather than earlier election.

In determining the purpose of an expenditure, the Board must conduct a fact-specific inquiry into the circumstances surrounding the expenditure. The Board will consider the following factors: (i) the nature of the candidate's campaigns, including the strategies employed, the types and amounts of spending in each race, and whether the candidate has a competitive primary and/or general election; (ii) the subject matter of the material or activity; (iii) the geographic distribution and location of the material or activity; (iv) the timing of the material or activity; (v) the relative benefit received or likely to be received by each campaign as a result of the material or activity; (vi) a comparison between the expenditure and expenditures by the candidate's past campaigns for the same office; and (vii) other circumstances surrounding the expenditure. In addition, as the burden of compliance with the expenditure limits and other requirements of the Act and Rules is on the candidate, the Board may draw a negative inference against a candidate who fails to provide timely documentation in response to a request by the Board.6

The Board emphasizes that the benefit received by a campaign, while important, is only one of the factors to be considered. An unintended or incidental benefit to a campaign resulting from an expenditure made by a committee formed for an earlier election, no matter how large that benefit, would not by itself be sufficient to rebut the presumption that the expenditure was for the earlier campaign. To hold otherwise would defeat the purpose of the presumption.

2. Expenditure Typology

The advisory opinion request provides a list of expenditures by category and proposes an attribution for each category.

With regard to the “city expenditures" enumerated in the advisory opinion request, the Board notes that, as a practical matter, it would not normally question whether expenditures reported by a campaign subject to the Act should in fact have been attributed to a campaign not subject to the Act.7 Therefore, even in the case of expenditures incurred prior to January 1, 2009, the Board likely would attribute the enumerated expenditures – fundraising costs, contributions to local community civic and political organizations, tickets to local community events, political support for candidates, and travel and other expenses related to personal appearances by Mr. Weiner – to the mayoral campaign. While the expenditures need not “solely reference" or “expressly advocate" Mr. Weiner's election to city office in order to be attributed to the mayoral campaign, they must be made in furtherance of Mr. Weiner's mayoral campaign in order to be considered to be campaign-related. See Advisory Opinion No. 2007-3 (March 7, 2007). The Board notes further that whether expenditures are made inside or outside of the ninth congressional district is unlikely to be significant to the attribution of expenditures reported by the mayoral campaign because the ninth congressional district is within New York City. As a consequence, Mr. Weiner's mayoral campaign may incur expenditures for political support to candidates whose offices overlap with the ninth congressional district.

In the case of an expenditure incurred and reported by Mr. Weiner's federal campaign prior to January 1, 2009, the starting point of the Board's analysis would be the presumption under Rule 1-08(c)(1): the expenditure would be attributed to the federal campaign unless the circumstances surrounding the expenditure, considered in light of the factors enumerated above, led the Board to conclude that the purpose of all or a portion of the expenditure was to further Mr. Weiner's mayoral campaign.8 In that case, the appropriate share of the expenditure would be attributed to the mayoral campaign and applied towards the mayoral campaign's expenditure limit.9 If the mayoral campaign's share of the expenditure has already been paid for by the federal committee, the mayoral committee should contact the Board before attempting to correct the misallocation. See Advisory Opinion No. 1996-2 (July 18, 1996) (discussing, inter alia, transfers between federal and city committees; transfers from a city committee to a federal committee may result in reduced public funds pursuant to Rule 5-01(n)(1)(i)).

The Board finds some of the expenditures listed in the advisory opinion request as “federal expenditures" to be clearly federal, and the Board would not question the attribution of these expenditures to Mr. Weiner's congressional campaign absent additional information indicating a dual purpose. For other expenditures, the Board lacks information sufficient to approve their attribution to the federal campaign.

Because candidates are not permitted under the Act to hold a single fundraising event for both a city and a federal campaign, the Board would consider fundraising costs reported by the congressional campaign to be exclusively federal. See Advisory Opinion No. 1996-2 (July 18, 1996).10

The Board would not normally question the attribution of campaign activities and materials that “expressly advocate" Mr. Weiner's congressional campaign, such as campaign literature, advertisements, and campaign events. However, while “express advocacy" is relevant to the attribution of expenditures, it is not dispositive, and if information came to the Board's attention indicating that a particular expenditure was actually made in furtherance of the mayoral campaign, the Board would look at the totality of the circumstances in light of the factors set forth in this advisory opinion. The Board would consider internet, radio, and television communications expressly advocating Mr. Weiner's re-election to Congress to be federal expenditures – as long as the communications were made prior to the day of the congressional election – notwithstanding “spillover" outside the ninth district. However, Mr. Weiner must be prepared to answer questions about the extent to which any communications were delivered outside the ninth congressional district, and in the absence of a satisfactory response, the Board may conclude that the communications were not targeted to potential voters in Mr. Weiner's congressional election but rather were intended to further Mr. Weiner's mayoral campaign.

Within the timeframes of Rule 1-08(c)(1) discussed above, tickets to community events within the ninth congressional district paid for by the congressional campaign would appear on their face to be legitimate expenditures of the congressional campaign. The Board assumes that these events would be attended by Mr. Weiner and/or his congressional campaign staff in order to further his congressional re-election campaign, and the fact that the events are to be held within the ninth congressional district is consistent with this purpose. Attendance at community events outside the ninth congressional district, however, may raise questions concerning the relevance of the events to the federal campaign. Events after January 1, 2009, even if paid for by the congressional campaign, will be presumed to be for the mayoral campaign.

Because Mr. Weiner maintains residences in both New York City and Washington, D.C. and regularly commutes between the two cities, the Board would attribute travel and expenses incurred by Mr. Weiner and his congressional staff in commuting to and from Washington, D.C. to his federal campaign unless the sole reason for a particular travel expenditure was to further the mayoral campaign. Other kinds of travel and related expenses incurred in connection with Mr. Weiner's congressional duties within and outside of the ninth congressional district, however, may raise questions for the Board. If travel expenditures were incurred in part to further Mr. Weiner's mayoral election, a portion of that travel must be paid for by the mayoral campaign. Thus, if Mr. Weiner travels to a number of events in a given day, some related to his mayoral campaign and some related to his federal campaign or congressional duties, his expenses for travel to the mayoral event must be paid for by the mayoral campaign. The mayoral committee should submit a methodology for pre-approval by the Board if travel expenditures of this kind are anticipated, and should be prepared to demonstrate that travel expenses reported by the federal campaign were not related to the mayoral campaign.

The Board would presume contributions to national political organizations such as the Democratic Congressional Campaign Committee and the national Democratic Party, and to federal political action committees (“PACs"), to be exclusively federal if made prior to the date of the congressional election. Contributions to state and city advocacy organizations, political parties, PACs, and to other national organizations, whether or not located in the ninth congressional district, also would be considered federal expenditures to the extent they were made prior to the congressional election and are accurately characterized as “advocacy work relating to Mr. Weiner's congressional duties." As with all expenditures, the Board may seek assurances that the expenditures relate to Mr. Weiner's congressional duties and are not intended to further his mayoral campaign. The congressional campaign must be prepared to provide information and documentation to the Board regarding the organizations receiving contributions, their relationship to Mr. Weiner, whether Mr. Weiner gave contributions to the organizations in prior campaigns, and whether the contributions would likely benefit Mr. Weiner's mayoral campaign.

The Board is unclear what kinds of activities would be included under “political support" for candidates (listed both under “expenditures in support or furtherance of Mr. Weiner's official congressional duties or staff that are not paid for by the U.S. government" and under “expenditures made within the confines of the ninth congressional district"). Pursuant to Admin. Code § 3-716 and Rule 1-04(h), certain political activities in support of another candidate are not considered to be expenditures by the candidate – and thus the question of allocation does not arise for such activities – unless the activities are paid for by the candidate. For example, a candidate's appearance with another candidate at a fundraiser, a candidate's endorsement of another candidate, the “insubstantial communication" of the candidate's appearance or endorsement of another candidate, and fundraising assistance in the form of written communications that do not promote the candidate, are not considered expenditures. Any incidental costs incurred by Mr. Weiner in connection with activities that fit within the categories covered by Admin. Code § 3-716 and Rule 1-04(h), however, such as Mr. Weiner's travel costs to and from a fundraising event for another candidate, must be allocated based on the underlying purpose of the expenditure. The Board would consider this purpose to be federal in the case of activities occurring prior to the congressional election and which were in support of candidates whose districts overlap with the ninth congressional district.

Mr. Weiner should contact the Board for more specific guidance if he intends to conduct “political activities" different from those covered by Admin. Code § 3-716 and Rule 1-04(h). In the absence of specific information regarding such activities, the Board is unable to opine on the relevance of the fact that the support is to be provided to candidates whose districts overlap or do not overlap with the ninth congressional district. The Board would seek additional information about the expenditures, including: the nature of the support provided; the relationship between Mr. Weiner and the candidates; whether Mr. Weiner had given support to the same candidates in past campaigns and, if so, using which committee; and the benefit likely to be received by each of Mr. Weiner's campaigns as a result of the support. The Board notes that contributions to other candidates and other political committees are not covered by Admin. Code § 3-716 and Rule 1-04(h), and the Board will carefully scrutinize any such contributions reported by Mr. Weiner's congressional campaign. Contributions determined by the Board to have been made in furtherance of Mr. Weiner's mayoral campaign, such as contributions to municipal candidates whose districts do not overlap with the ninth congressional district or contributions made after the congressional election, may result in reduced public funds pursuant to Rule 5-01(n)(1)(iii) unless the contributions meet the requirements provided in Admin. Code § 3-705(8).

The Board notes that the location of campaign activity is relevant to the attribution of expenditures and that the logical focus of Mr. Weiner's campaign for re-election to Congress will be the ninth congressional district. Thus, with regard to contributions by the congressional committee to community civic or political organizations in the ninth congressional district, the Board would consider the expenditures to be exclusively federal in the absence of contrary evidence concerning their purpose. For contributions to organizations outside of the ninth congressional district, the Board would require the congressional committee to provide additional information concerning the nature of the organizations to which Mr. Weiner contributed, and the relationship between Mr. Weiner and the organizations. Any benefit received by the mayoral campaign would only be relevant to the extent it indicated that the actual purpose of the contributions was to further, in whole or in part, the mayoral campaign.

The description of the policy website does not provide detail sufficient to enable the Board to determine its purpose. The Board notes that the website would reach an audience well beyond the ninth congressional district, and voters in the congressional district are more likely than voters living elsewhere to be familiar with Mr. Weiner's policies. These factors may indicate that the website will be mayoral rather than federal. Therefore, the Board would require further information demonstrating the relation of the policy website to the federal campaign.

The description of the policy research and public opinion polling is also insufficiently detailed. Polls and research useful to only one campaign would not be shared expenditures. Policy research and polling conducted exclusively within the ninth congressional district would be considered federal absent information such as polling questions related to an anticipated mayoral race indicating that such polling was for the mayoral campaign. Consistent with its past practice, the Board may request the questions used in the polls, the names of persons contacted in conducting the polls, and copies of the policy research. See Advisory Opinion No. 1997-6 (June 24, 1997).

3. Allocation Methodology

The advisory opinion request proposes that Mr. Weiner's federal and city committees issue separate checks for expenditures for shared personnel, equipment, and facilities. Expenditures for shared personnel would be based on the actual time worked on each campaign as demonstrated by contemporaneous time records.

The Board views this proposed methodology favorably but offers the following comments and provisos. With regard to shared personnel, both the federal and mayoral campaigns must maintain contemporaneous time records demonstrating the hours worked on each campaign. These records must include a description of the specific matters worked on, and the description must be sufficiently detailed to enable the Board to determine the basis for the allocation. This may require Mr. Weiner to maintain records for his federal committee not required under federal law. Any federal, state, or city taxes, and any benefits such as insurance, paid by the employer on behalf of employees, also must be allocated according to the amount of work performed for each campaign.

However, the Board questions whether the work of all personnel can be allocated according to the actual time worked on each campaign. Some employees, such as high-level campaign strategists, may perform work whose purpose is to benefit both campaigns simultaneously or is not easily categorized. Therefore, Mr. Weiner must either submit evidence of a firewall separating the campaigns or attribute the time of such employees based on the personnel allocation used to allocate non-personnel expenditures (see below).

For shared non-personnel expenditures, such as office space, equipment, supplies, and telephones, the advisory opinion request proposes to allocate the expenses in the same ratio as the personnel allocation based on the time worked.

The Board notes that it is not possible to anticipate all non-personnel expenditures, and an allocation based on the ratio used for personnel expenditures may not be appropriate in all cases. The allocation would appear appropriate for office space, rented equipment, and office supplies. However, the Board is unclear how the proposed methodology would apply to initial payments such as a first month's rent and one-time purchases such as equipment and furniture. These may be made at a time when there is not yet a history of personnel expenditures and the mayoral campaign would “inherit" such items after the congressional campaign, resulting in an underpayment by the mayoral campaign. A methodology for such items should therefore be submitted to the Board. For telephone and utility bills, the proposed methodology would appear appropriate, except that long-distance charges should be billed to the committee responsible for those calls.

Mr. Weiner must maintain and submit to the Board detailed invoices for all shared non-personnel expenditures, and must also provide documentation demonstrating the basis for any allocation of these expenditures between Mr. Weiner's federal and mayoral committees. Again, this may require the federal committee to submit to the Board records which it is not otherwise required to maintain under federal law.


1 The request was made by John Siegal of Baker & Hostetler LLP in a letter to the Board dated January 5, 2007, which is attached to this advisory opinion.

2 The advisory request at times refers to Mr. Weiner's mayoral committee as an “exploratory" committee. However, the Act does not differentiate between exploratory committees and other kinds of candidate committees. See Advisory Opinions Nos. 1989-9 (January 25, 1989), 1993-7 (July 20, 1993), and 1997-6 (June 24, 1997).

3 Rule 1-08(c)(1) states:

(c) Attributing an expenditure to an election.

  1. An expenditure is presumed to be made for the first election (in which the participant, limited participant or non-participant is a candidate) following the day it is made, except: (i) in the case of a State or local election, expenditures made before the first January 12 after an election will also be presumed to be made for that election; and (ii) in the case of a federal election, expenditures made before the first January 1 after the election will also be presumed to be made for that election, except as may otherwise be provided under federal law and regulations.

The presumption contained in Rules 1-04(f) and 1-05(h), for the attribution of contributions and loans to an election, respectively, is the same as that found in Rule 1-08(c)(1).

4 According to the advisory opinion request, pursuant to Federal Election Commission (“FEC") regulations, a federal candidate: (i) must use a federal committee to make and disclose expenditures; (ii) “may not defray any portion of a disbursement with non-Federal funds"; and (iii) “may not allocate the cost of an activity between Federal and non-Federal funds even if there is arguably some non-Federal election benefit to the expenditure." Citing 11 CFR 300.60(a) and (b). The only exception to this rule is said to be that a federal candidate who is also a candidate for State or local office may use non-federal election funds if the solicitation, receipt or spending of funds is permitted under State law; and “refers only to that State or local candidate, to any other candidate for that same State or local office, or both." Citing 11 CFR 300.63. The advisory opinion request states that this analysis is based on a memorandum prepared by Mr. Weiner's congressional committee's legal counsel, Perkins Coie LLP. The Board assumes, for the purposes of this advisory opinion only, that the legal analysis concerning FEC regulations contained in the advisory request is substantially correct. Further, to the extent any conflict arises between this advisory opinion and FEC requirements, the Board notes that the Act, and the Board's enforcement of the Act, are not preempted by federal law.

5 The proposed standard is claimed to be consistent with Advisory Opinion No. 1999-5 (February 23, 1999). This opinion dealt with the attribution of transactions to political committees established for different elections by Peter F. Vallone. According to the advisory opinion request, under the “Vallone precedent" “Mr. Weiner's expenditures prior to January 1, 2009 must be treated as being made on behalf of his 2008 congressional re-election campaign unless they are made ‘solely for the purpose of satisfying the obligations' of a 2009 city campaign." In fact, however, Advisory Opinion No. 1999-5 suggests something quite different. According to the opinion, contributions received by Mr. Vallone's 1998 gubernatorial election committee after January 12, 1999 – the date before which contributions were presumed pursuant to Rule 1-04(f)(1) to be for Mr. Vallone's gubernatorial election – would not be presumed to be for Mr. Vallone's next election (the 2001 mayoral election), provided the contributions were “expended ‘solely for the purpose of satisfying the obligations of the 1998 gubernatorial election.'" Advisory Opinion No. 1999-5 thus stands for the proposition that the Board will not presume post-election contributions, loans, and expenditures to be for a candidate's next election if the transactions were solely for a prior election. It does not lend support to a proposed new standard according to which the presumption that transactions are for a candidate's next election can only be overcome if the transactions were made solely for a different election. To the contrary, the advisory opinion explicitly states that this presumption can be overcome “if evidence is presented to show a connection with" an election other than the candidate's next election. Advisory Opinon No. 1999-5 at p. 1.

6See Admin. Code § 3-703(1)(d); Rules 1-08(d), (l); 4-01. While federal committees are not subject to Program requirements, the Board may request that Mr. Weiner provide the Board copies of his congressional committee's FEC filings. See Rule 3-02(f)(5); Advisory Opinions Nos. 1996-2 (July 18, 1996), 2000-7 (November 16, 2000).

7 Because participant and limited participant mayoral campaigns are subject to an expenditure limit, they have an incentive to under-report expenditures, whereas congressional campaigns have no such incentive.

8 Prior to reaching any conclusions about the attribution of specific expenditures, the Board may request specific documentation and information from the Campaign. The Board notes that its questioning of particular transactions is not an indication that the Board has concluded or will conclude that expenditures were not properly attributed. Pursuant to Rule 1-08(c)(3), “candidates have the burden of demonstrating that expenditures made by committees reported not to be involved in the election in which the candidate is currently a participant or limited participant were not made in connection with such election. Failure to meet this burden will result in the application of all Program requirements to these committees for such election."

9 Any 2008 expenditures attributed to the mayoral campaign would be applied against the $270,000 expenditure limit applicable to the first three years of the 2009 four-year election cycle. See Admin. Code § 3-706(2), (2-a). The Board notes that it does not consider arguments asserting that the “value" or “utility" of a particular expenditure is less than the amount actually spent, so that all or a portion of the full amount spent should be excluded from the spending limits. See Advisory Opinion No. 1997-6 (June 24, 1997). Rather, the amount to be attributed is based on the purpose and amount of the expenditure rather than on the value of the benefit received.

10 If funds are transferred from the federal campaign to the city campaign, an attribution of expenditures for fundraising must be made, and the candidate has the burden of demonstrating that the transfers do not derive from sources that are prohibited under the Act (some of which would be allowable under federal law) or are contributions that exceed the Act's limits. See Admin. Code § 3-703(1)(f), (k), (l), (14), Rule 1-07(c), (d), 1-08(o).