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In the Arena: Law and Politics Update Legal Commentary on Federal, State and Local Political Legislation

The Tangled Web of Paul Ryan’s FEC Request

Posted in Personal use of campaign funds

At issue in Advisory Opinion Request 2014-06 is whether Representative Paul Ryan’s leadership PAC, Prosperity Action, may promote the sale of his upcoming book on the Internet beyond de minimis levels. Representative Ryan intends to receive royalties from the book.

The Federal Election Commission published two drafts of a response to his request. The first, Draft A, would grant it. The second, Draft B, broadly asserts that “the Act’s personal use prohibition applies to leadership PACs, such as Prosperity Action.” Adopting Draft B would be a significant policy change for the FEC. In its legislative recommendations just last year, the FEC asked Congress to amend 2 U.S.C. § 439a to cover leadership PACs, saying: “Congress might not have considered the application of the personal use prohibition to this particular type of political committee.”

But at the heart of the request is a highly technical question that vexed many during the failed prosecution of John Edwards. A separate FEC regulation, 11 C.F.R. § 113.1(g)(6), asks: when a third party pays an expense that the candidate’s campaign cannot pay, when is that payment still treated as a contribution to the candidate, and thus as a prohibited personal use of campaign funds by the candidate? If the third party would not have made the payment irrespective of candidacy, then the payment is a contribution, and a prohibited personal use of funds. In the Edwards case, the “third party” was Bunny Mellon, and the expense was to conceal an extramarital affair. In Representative Ryan’s request, the third party is Prosperity Action, and the expense is to promote his book. Draft B holds that Prosperity Action would trigger personal use through excessive promotion.

As Marc Elias Tweeted yesterday evening, the FEC considered a very similar question before. In 2008, it told Senator Kit Bond that, while his campaign may not pay the co-author of a book he was writing on terrorism, his leadership PAC could make the payment. “Because the book would advance the leadership PAC’s goals and the leadership PAC would pay for the book and the co-author’s expenses irrespective of the campaign, the $25,000 payment to the co-author would not constitute a contribution under 11 CFR 113.1(g)(6).” Unlike Representative Ryan, Senator Bond averred that he would not receive royalties on the book. But one can certainly argue that the receipt of royalties is irrelevant to whether the book advances PAC goals, and whether the PAC would have paid for it irrespective of the Member’s campaign.

Even if the FEC sides with Representative Ryan and adopts Draft A, Prosperity Action still may not be able to promote the book beyond a de minimis level. This is because House ethics rules separately prohibit the personal use of campaign funds—and this prohibition can apply to leadership PACs. (A sensational “60 Minutes” report last October completely overlooked the separate congressional ethics restrictions, claiming instead that a “loophole” allowed Members of Congress to spend their leadership PAC funds on personal use “with no restrictions.”) The Committee on Ethics tells Members specifically that the House prohibition on personal use reaches beyond their own principal campaign committees “to any campaign funds under a Member‘s control”—which can include their leadership PACs. (House Ethics Manual at 152.)

In fact, if the FEC were to reject Draft B, Representative Ryan may even be worse off. To reject Draft B, the Commission would have to conclude—at least tacitly—that the PAC would make the payment even if Representative Ryan were not running for federal office. Affirming the personal nature of the expense in such a way would not help Representative Ryan before the Committee on Ethics or the Office of Congressional Ethics, if they were to review the PAC’s payments.