A Question of Ethics

Are Members Allowed to Use Campaign Funds for Legal Fees?

July 21, 2008

Q: As the treasurer of the campaign committee of a current House Member, I oversee all of the campaign’s finances. One of the recurring issues I face is distinguishing between campaign expenses, for which we may use campaign funds, and the Member’s personal expenses, for which we may not. I heard recently that Sen. David Vitter (R-La.) has sought permission from the Federal Election Commission to use campaign funds for legal fees related to the “D.C. Madam” legal proceedings. I presume that the FEC will refuse Vitter’s request, as these appear to be personal expenses. Or, are we permitted to use campaign funds for Members’ legal fees?

A: While Vitter is in the Senate, your Member is in the House, so the House rules apply. The House rules and the Federal Election Campaign Act both contain restrictions upon the use of campaign funds. Thus, the House Ethics Manual states that a “Member’s use of campaign funds … is permissible only if it complies with the provisions of both the House Rules and the FECA.”

Let’s start with the House rules. House Rule 23 provides that a Member may spend campaign funds for “bona fide campaign or political purposes” but “may not convert campaign funds to personal use.” The Ethics Manual specifically addresses legal fees and states that a Member should consult with the ethics committee before using campaign funds for such fees. In general, “campaign funds may not be used when the action is primarily personal in nature, such as a matrimonial action.” However, while the ethics committee has jurisdiction over violations of Rule 23, it is likely to defer to any FEC conclusions regarding the use of campaign funds for legal fees.

Historically, the FEC has stated that Members have wide discretion in the use of campaign funds. Like the House rules, however, FEC rules prohibit the conversion of campaign funds to personal use, which is use “to fulfill a commitment, obligation, or expense of any person that would exist irrespective of the candidate’s campaign or duties as a Federal officeholder.” The regulations specify certain uses that are per se personal use, including a Member’s household food items and clothing. The regulations also provide that the FEC shall consider other uses, including legal fees, on a case-by-case basis.

In promulgating the regulations, the FEC explained that their use for legal fees will not be considered appropriate “merely because the underlying legal proceedings have some impact on the campaign or [Member’s] status.” In the time since the regulations were promulgated, the FEC has issued several advisory opinions regarding specific requests to use campaign funds for legal fees, granting them in some cases, but denying them where it regarded the fees as purely personal in nature.

In Vitter’s case, Vitter’s attorney sent a letter to the FEC requesting permission to use campaign funds for roughly $200,000 in legal fees related to the trial of Deborah Jeane Palfrey, who subpoenaed Vitter to testify in her criminal trial. Specifically, the legal fees related to: (1) efforts to quash Palfrey’s subpoenas of Vitter; (2) consultations among Vitter, his attorneys and other advisers regarding the legal proceedings and their impact on the Senate Ethics Committee’s inquiry of Vitter; and (3) monitoring of the Palfrey legal proceedings. According to the letter, FEC regulations and precedent establish a “but-for” test: “Legal expenses that would not have been incurred but for an individual’s status as a candidate or officeholder may be paid with campaign funds.”

The letter argued that Palfrey pursued a strategy of targeting high-profile witnesses, specifically picking Vitter because he is a Senator, and that he was forced to hire legal counsel to defend against the strategy. The letter noted that, while approximately 15,000 phone numbers appeared in Palfrey’s records, Vitter was one of the few who was actually subpoenaed to testify. The letter even noted that a Google search for “David Vitter Deborah Palfrey” produced more than 70,000 hits — far more than any other Palfrey client or witness. Thus, the letter concluded, if Vitter were not a Senator, he would never have incurred the legal fees.

This echoed an argument made by then-Sen. Bob Kerrey (D-Neb.) in 2001, when he sought to use campaign funds for media consulting expenses incurred as a result of inquiries pertaining to Kerrey’s involvement in a 1969 military operation in Vietnam resulting in the deaths of civilians. Although Kerrey was no longer a Senator at the time, and although the media inquiries concerned conduct that had occurred long before Kerrey joined the Senate, Kerrey sought permission to use campaign funds for the media consulting expenses. The FEC granted Kerrey’s request, basing its decision on the premise that the media inquiries “would not have occurred if Mr. Kerrey had not been a prominent Senator and prominent Federal candidate.”

Whether the FEC would apply this reasoning to legal fees remains to be seen. There is some evidence that it would. For example, in 1998 Rep. Earl Hilliard (D-Ala.) sought permission to use campaign funds for certain legal fees. The FEC issued an advisory opinion stating: “The use of campaign funds to pay legal expenses that would not exist absent … Federal officeholder status would be permissible.” However, the FEC ultimately concluded that while for some categories of legal fees Hilliard could use campaign funds to cover the fees in their entirety, for other categories he could use campaign funds for only 50 percent of the fees.

Whatever the FEC decides regarding Vitter’s request, the answer to your question is that the FEC assesses the use of campaign funds for legal fees on a case-by-case basis. Therefore, if you are considering using your committee’s funds for your Member’s legal fees, in the absence of a clear precedent, I would never assume that it’s appropriate to do so. But, on the other hand, I would never assume that it’s not, either. Ask the FEC. The worst thing that can happen is that they say no.

© 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

Is Congress Allowed to Influence K Street Hiring Decisions?

July 7, 2008

Q: As an activist for ethical government, I am watching closely the reports that Democrats in Congress are pressuring K Street employers to hire more Democrats. In several Roll Call articles, I have read that they are frustrated about the shortage of Democrats hired by trade associations, lobbying firms and corporate government relations departments, and that they may take action to correct this perceived shortage. Doesn’t last year’s ethics reform prohibit Members from pressuring employers regarding hiring decisions?

A: In the nine months since Congress enacted the Honest Leadership and Open Government Act, much of the discussion among Members, staffers and ethics lawyers has focused on the new restrictions on gifts and lobbying. Your question concerns a provision that has received comparatively little attention — the provision aimed at “Ending the K Street Project,” which makes it a crime for Members and staffers to exert certain types of influence upon the employment decisions of private entities. Violations can result in heavy fines and up to 15 years in jail.

The law came in the aftermath of the “K Street Project,” which loosely described efforts by Republicans in Congress to pressure lobbying firms and other private employers to hire Republicans. Upon its passage, Members issued press releases declaring that the provision “ends the pay-to-play scheme known as the K Street Project,” puts “an end to the influence peddling K-Street Project,” and “prohibits private entities from hiring and firing based on politics.” Sen. Bob Casey (D-Pa.) said on the Senate floor that the legislation was aimed at “anyone who would engage in the practice of wrongfully influencing a private entity’s employment decisions and/or practices … in exchange for political access or favors.”

In light of this rhetoric, I can see why you might think that Democrats’ recent efforts to ramp up pressure on K Street employers could violate the new law. For example, you probably wondered about Roll Call’s report that senior Democratic aides recently met with key lobbyists to push them to abandon their allegiance to the GOP. It’s this pressure that many government ethics advocates like you seek to end.

Yet, a closer look at the language of the new statute reveals that it does not target all types of pressure on lobbyists’ hiring decisions and that merely demanding that employers hire Democrats does not alone violate the statute. Rather, other circumstances must be present as well. For one, the statute applies only where the Member or staffer exerting the pressure offers to take or withhold an official act for purposes of influencing the hiring decision.

Moreover, a last-minute change just before passage narrowed the new law’s scope even further. As initially drafted, the law would have made it a crime for a Member or staffer to offer to take or withhold an official act “with the intent to influence, on the basis of partisan political affiliation, an employment decision or employment practice of any private entity.” The version that actually passed is identical except that it inserts the word “solely” before “on the basis of partisan political affiliation.”

This change is not insignificant. It means that a Member or staffer who offers to take an official act with the intent to influence a private entity’s employment decision cannot be found guilty unless a prosecutor can show beyond a reasonable doubt that partisan political affiliation was the only reason for influencing the employment decision. Thus, a defendant who has some other, additional reason for influencing the employment decision — such as competence, personal friendship or committee experience — is not guilty under the statute.

However, the narrow scope of the new law does not mean that Members and staffers should feel free to pressure employment decisions. First, the difficulty prosecutors might face in obtaining a conviction under the statute would not necessarily deter investigations of potential violations. Given the substantial burden, expense and bad publicity that such investigations involve, Members and staffers have good reason to avoid conduct that might give rise to investigations.

Second, the ethics rules of both chambers now contain the same restrictions as those in the new statute. Unlike criminal sanctions, penalties for violations of Congressional ethics rules do not require proof beyond a reasonable doubt. Thus, Members and staffers who improperly influence private entities’ employment decisions may be more vulnerable to an ethics violation than a criminal conviction.

Third, the language in the House ethics rule omits the word “solely.” Therefore, in the House, a Member or staffer commits an ethics violation whenever he offers to take or withhold an official act with the intent to influence an employment decision or employment practice of any private entity on the basis of partisan political affiliation. This may be true regardless of whether political affiliation was the sole basis.

Finally, even where improperly influencing the hiring decision of a private employer does not violate the new statute or new ethics rules, the ethics committees might still conclude that such activity violates some other ethics rule. For example, both chambers generally forbid conduct that does not reflect creditably on Congress. The House and Senate ethics committees have exercised broad jurisdiction in applying these general prohibitions to all kinds of improper conduct, even where the conduct does not violate a specific rule.

So, to return to your question, last fall’s ethics reform does increase the potential for liability to arise from pressuring employers about their hiring decisions. However, the narrow language of the new statute and ethics rules — particularly the insertion of the word “solely” — means that the new restrictions do not apply every time a Member or staffer exerts such pressure. In fact, it leaves many types of pressure untouched.

© 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.