A Question of Ethics

May Hill Staffers Advance the Costs of Election Campaigns?

May 19, 2008

Q: I work for a Member of the House who has decided not to seek re-election this fall and has hand-picked his preferred replacement. Many of the Member’s staffers are supporting the replacement, and I have been working on his campaign. To comply with the rules, I work on the campaign only in my spare time, and I make sure never to use official Congressional resources like phones, office space, etc.

Last weekend, I picked up $300 worth of campaign signs for an upcoming fundraiser for the candidate. I paid for the signs myself and was immediately reimbursed from campaign funds when I returned to the campaign office. I didn’t think anything of it at the time, but when the campaign attorney found out about this today, he said that it was illegal for me to pay for the signs. That doesn’t make any sense to me because I was reimbursed. He’s not right, is he?

A: No, he’s not. However, it’s not the reimbursement that makes him wrong. Rather, believe it or not, it is the fact that the campaign is for someone other than your employing Member. In fact, if your Member had not decided to step down and the signs had been for his campaign, it may well have been illegal for you to pay for the signs, even though you were reimbursed.

The federal statute in question is 18 USC § 603, which criminalizes campaign contributions from federal employees to their supervisors. Specifically, the statute makes it a crime for an “officer or employee of the United States” to make a contribution to any federal employee, Senator or Representative “if the person receiving such contribution is the employer or employing authority of the person making the contribution.”

Now, you might be asking yourself what a statute that criminalizes campaign contributions has to do with your situation. Good question. The answer lies in the definition of “contribution.”

For purposes of the statute, “contribution” has the same broad definition as it has throughout the Federal Election Campaign Act. Under that definition, a contribution includes, among other things, any “gift, subscription, advance, or deposit of money … made by any person for the purpose of influencing any election for federal office.” Federal Election Commission regulations provide further detail regarding these definitions.

In the case of an “advance,” the regulations state that, barring an exemption, a payment of money qualifies as a contribution if it is made “by an individual from his or her personal funds … for the costs incurred in providing goods or services” to a candidate or political committee. The regulations provide an exemption where the individual is reimbursed within a certain window of time, but that exemption is explicitly limited to travel and food expenses incurred while traveling on behalf of a campaign. It does not extend to expenses for other campaign goods and services.

In your case, you paid $300 for campaign signs. Under the strict FEC regulations regarding advances, it would be difficult to argue that your payment did not qualify as a contribution at the time you paid for the signs. Therefore, had the campaign been for your Member, the attorney may have been right that it was illegal to front the costs of the signs.

The House Ethics Manual drives home this point. It says that an individual’s outlay on behalf of a campaign qualifies as a campaign contribution “even if it is intended that the campaign will reimburse the individual promptly.” The manual poses an example involving a Member’s campaign that plans to purchase souvenirs to give to the Member’s supporters. The manual states: “An employee of the Member’s congressional office may not purchase the items with her own money … even if the campaign makes arrangements to reimburse her promptly.”

The manual also makes clear that the rules apply to Congressional committee staffers as well. The “employing authority” for such staffers is the committee chairman. In fact, the manual states, if a committee staffer is employed by the minority party, he or she cannot contribute to the ranking member or the chairman.

So, while you are fine in this case, don’t forget that if you do end up working on the campaign of someone who qualifies as your “employing authority,” there are strict rules regarding contributions and advances. Be aware that there will be plenty of temptations to break them. Perhaps, for example, you drive across town in rush-hour traffic to run a campaign errand only to discover that you left the campaign funds needed for the errand back at the campaign office. What to do? Fight back across town to pick up the funds? Or advance the costs and risk breaking the law?

As painful as D.C. traffic can be, the criminal penalties are much worse: up to three years in jail. Although it seems extremely unlikely that a government attorney would prosecute a staffer for such an innocent violation, you wouldn’t want to be the one to find out.

© Copyright 2008, Roll Call Inc. Reprinted with permission. Widely regarded as the leading publication for Congressional news and information, Roll Call has been the newspaper of Capitol Hill since 1955. For more information, visit www.rollcall.com.


A Question of Ethics

The $200,000 Question: When is a Gift 'From' an Organization?

May 5, 2008

Q: I am the senior compliance officer at a Fortune 100 company with a question about the scope of the Congressional gift rules. I have asked around, and there seems to be some disagreement about the answer to my question. My understanding is that, because our company has in-house lobbyists, the gift rules prohibit us from giving gifts to Congressional employees. But I’m having trouble understanding what it means for a gift to be from our company. We have more than 30,000 employees. I can’t imagine the gift rules apply every time one of them gives a gift to someone in Congress. At least I hope not. So here’s my question. When does a gift count as being “from” a company?

A: This is what I call the $200,000 question. I’ll explain what I mean in a minute. But first, let’s try to answer it.

As you are aware, the Honest Leadership and Open Government Act of 2007 provides that companies employing in-house lobbyists are bound by the Congressional gift rules. Specifically, the statute applies to “any organization that employs one or more lobbyists and is registered or is required to register.” Such an organization “may not give a gift … to a covered legislative branch official if the person has knowledge that the gift … may not be accepted … under the Rules of the House of Representative or the Standing Rules of the Senate.”

Given your role as compliance officer at a firm that employs lobbyists, I imagine you have had countless headaches navigating your way through a set of Congressional rules that, when drafted, was never intended to apply to anyone but Members and staff. Applying these gift rules to any company, but particularly one as large as yours, poses a host of thorny questions. You’ve asked perhaps the thorniest of all: Who exactly is bound by the rules?

Unfortunately, believe it or not, there is no clear answer. One plausible suggestion is that the rules should apply only to gifts from your in-house lobbyists. After all, the new legislation is clearly aimed at lobbyists, and it is their relationship with Congressional employees that carries the greatest risk of the appearance of impropriety. If not for the fact that your company employs lobbyists, the rules wouldn’t apply to your company at all.

Appealing as this might sound to you, this answer has not been endorsed by either chamber’s ethics committee. Rather, both committees have issued guidance that is at odds with this approach. In the Senate, the Ethics Committee has stated that Senate employees may not accept a gift from the director of a foundation “which occasionally retains help from a local lobbying shop” even where the director himself is not a lobbyist. Likewise, in the House, the Ethics Manual contains guidance suggesting that, in the case of organizations with in-house lobbyists, the rules apply to a broader group of employees than just the in-house lobbyists.

In fact, under one interpretation, the House and Senate guidance could be read to imply that a gift qualifies as being “from” an organization whenever any organization employee gives a gift to any Congressional employee. Yet, this seems difficult to believe. The rules simply can’t apply to every employee in every organization that employs lobbyists. In your case, you have more than 30,000 employees. Are the rules really implicated every time one of those employees gives a gift to one of the 15,000-plus Congressional employees? Across the country, literally millions of people work at companies with in-house lobbyists. Do the rules come into play every time one of those employees gives a gift to someone who happens to work in Congress?

It seems then that the answer must lie somewhere in between. Application of the rules appears to extend further into company ranks than in-house lobbyists alone. Yet, the rules cannot possibly extend to every company employee. Given the absence of official guidance on the issue, where exactly in between the answer lies is anybody’s guess. Until and unless such guidance comes, the best you can do is implement formal compliance mechanisms designed to educate your employees regarding the rules and to minimize the likelihood of a violation.

So, why is this the $200,000 question? Under the statute, if your company violates the Congressional gift rules, it could face a fine of up to $200,000 per violation. In addition, a company employee must periodically certify that your company has not violated the rules, which exposes both the employee and your company to even more potential liability. Of course, in reality, it seems unlikely that the government would seek to impose penalties for minor violations of the rules, particularly by employees whose jobs do not involve regular interaction with Congress. On the other hand, if you are like many compliance officers, you may consider it part of your job responsibility not to take that chance.

© Copyright 2008, Roll Call Inc. Reprinted with permission. Widely regarded as the leading publication for Congressional news and information, Roll Call has been the newspaper of Capitol Hill since 1955. For more information, visit www.rollcall.com.