April 1, 2015 TO: FROM: RE: Hillary for America Marc E. Elias Agency As we have discussed, the prohibition on soliciting soft money extends to agents acting on behalf of Secretary Clinton. I. Legal Background For these purposes, an agent means any person who has actual authority, either express or implied, to engage in any of the following activities on behalf of a Federal candidate: to solicit, receive, direct, transfer, or spend funds in connection with any election. 1 This definition is expansive and covers a large number of individuals associated with a campaign s fundraising operations. The Federal Election Commission ( FEC ) contemplates that the number of individuals involved in fundraising for a campaign can reach hundreds and, in the case of presidential campaigns and national party committees, potentially thousands of individuals, most of whom are volunteers. 2 An agent includes persons who hold campaign titles and positions related to fundraising (e.g. finance committee ) and would likely also include any person bundling for the campaign or hosting an event. It would also include any person who does not raise funds for the campaign, but has been instructed by the campaign to raise hard money for party committees or Super PACs. There are some important limits on the definition of agent, however. The fact that a person was an agent of the campaign in the past does not mean that this person is necessarily still an agent of the campaign. The FEC has been clear that a past agency relationship would not by itself prohibit [the fundraising agent] from raising non-federal funds for a different organization. 3 Likewise, the fact that a person is a family member or a close personal friend of the candidate does not necessarily make the person a fundraising agent of the campaign. 4 In other words, it is 1 11 C.F.R. 300.2(b). 2 Final Rule, Definitions of Agent for BCRA Regulations on Non-Federal Funds or Soft Money and Coordinated and Independent Expenditures, 71 F.R. 4975, 4977 (Jan. 31, 2006). 3 Advisory Opinion 2010-3 (Reid). 4 In Advisory Opinion 2007-5 (Iverson), the FEC concluded that the Chief of Staff for a Member of Congress was not currently an agent of [the] Congressman and, could solicit soft money for the state party without restriction. See id. ( You have represented that Mr. Iverson has received no instruction from Congressman Rehberg that he is the Congressman's agent for fundraising purposes, nor has the Congressman's conduct caused Mr. Iverson to believe that he is the Congressman's agent for such purposes. Accordingly, Mr. Iverson's role as Chief of Staff does not include actual authority, express or implied, to raise or spend campaign funds, and he is not an agent of Congressman Rehberg under 11 CFR 300.2(b)(3). ). In other cases, the FEC has determined that a son is not
not enough that a donor believes the person has authority based on her or his relationship with the candidate or campaign. 5 A person is only a fundraising agent of a campaign when she or he has been granted actual authority to raise or spend funds for the campaign and that authority has not been revoked or relinquished. A campaign s fundraising agent may not solicit soft money (e.g. funds that do not comply with federal amount limits and source restrictions) for a Super PAC while acting on behalf of, or on the authority of, the candidate or campaign. 6 However, a fundraising agent may solicit soft money for a Super PAC as long as she or he does not engage in these activities on behalf of or on the authority of the candidate or campaign. This so-called two hats allowance is designed to preserve an individual's ability to raise funds for multiple organizations. 7 As we explain in more detail below, however, the ability of agents to use this allowance may be limited in practice. II. Discussion The legal issue we face is whether to permit individuals who are agents of Hillary for America ( HFA ) to solicit soft money for Super PACs. Of course, the campaign faces some inherent limits in its ability to control this issue, because it may not make an explicit or implicit request for an individual to solicit soft money. Nonetheless, there are legally permissible ways for the campaign to protect itself on this front without making any requests for supporters to raise soft money. First, the campaign can avoid conferring actual authority to solicit funds on an individual that it knows to be raising soft money for a Super PAC. Second, the campaign can inform the Super PAC which individuals are serving as its agents and ask that the Super PAC not utilize these individuals to raise funds. A. No Overlapping Agents The legally safest option is to prohibit an individual who is a fundraising agent of the campaign from soliciting any soft money for a Super PAC. This means that any person with a fundraising title or position with the campaign (including staff, consultants, or volunteers), any person currently soliciting funds for the campaign (e.g. a bundler or event host), and any person soliciting funds for a party or PAC at the campaign s direction could not solicit for a Super PAC during the period when they were a campaign agent. This option still preserves some flexibility for those who wish to do some fundraising for the campaign and some fundraising for the Super PAC albeit at different times in the cycle. Under necessarily the fundraising agent for his father, and that a husband is not necessarily a fundraising agent for his wife. See Advisory Opinion 2010-3; Matter Under Review 5761 (Madrid) (March 23, 2007). 5 71 F.R. at 4976 (rejecting suggestion to define agent as someone with apparent authority, but not actual authority, to raise or spend funds). 6 See Final Rule, Prohibited and Excessive Contributions: Non-Federal Funds or Soft Money, 67 F.R. 49064, 49083 (July 29, 2002) ("the agent must be acting on behalf of the principal to create potential liability for the principal."). 7 71 F.R. at 4979. -2-
this option, for example, it would still be permissible to allow an individual to host a campaign fundraiser in June; terminate her campaign fundraising agency in July; and begin soliciting for a Super PAC immediately thereafter, provided, of course, that these decisions were not made at the behest of the candidate or HFA. B. Rely on Two Hats Allowance for all Persons Except Candidate and Staff As noted above, the FEC has expressly said that an individual (other than the officeholder or candidate) may wear two hats soliciting hard money for a campaign in one capacity and then soliciting soft money for an outside group in another capacity. An individual who engages in this two hats activity must conduct the soft money fundraising solely in her capacity as a fundraising agent for the outside group. She may not engage in soft money fundraising on behalf, or on the authority, of the candidate or campaign. Though the FEC has endorsed the two hats model, it has not specified precisely which steps a campaign fundraising agent must follow to avoid a finding that her soft money fundraising was undertaken in her capacity as an agent for the campaign. In the absence of an explicit rule, we have generally provided a series of guidelines for individuals wearing two hats to follow: 8 The individual should not use campaign resources (e.g. staff, facilities, donor lists, campaign materials, e-mail addresses) while raising funds for the Super PAC. The individual should not identify herself as being associated with the campaign while raising funds for the Super PAC. For instance, if the individual has a fundraising title with the campaign, it should not be used while raising funds for the Super PAC. When soliciting funds for the Super PAC, the individual should be clear that she is doing so on behalf of the Super PAC, and not the campaign. For example, if letters are sent to prospective Super PAC donors, they should be on Super PAC letterhead. If emails are sent to prospective Super PAC donors, they should be from a Super PAC e-mail address. The individual should receive a formal title from the Super PAC, which can be used in Super PAC fundraising efforts. The individual should not solicit funds for both entities at the same time (e.g. in the same letter, phone call, e-mail, meeting, or event). The individual should make general solicitations for the Super PAC and not earmark funds for the candidate. This model works reasonably well when the Super PAC is supporting multiple candidates. Because the campaign s fundraising agent is not soliciting earmarked funds under these 8 These are prudential guidelines only; there is not an explicit FEC regulation or explanation that governs these circumstances. -3-
guidelines, the funds raised by the campaign s fundraising agent might not even be spent in the candidate s race. When combined with the other prudential guidelines, there is a credible argument that the campaign s fundraising agent is raising funds for the Super PAC in a separate capacity and is not doing so on behalf, or on the authority, of the campaign. This is a much harder argument to sustain when the Super PAC is supporting only one candidate, as is the case here. Even if the funds raised by the campaign agent are not specifically earmarked for the candidate s race, there is a substantial (essentially 100 percent) likelihood that the funds raised will be spent in the candidate s race. The other guidelines set forth above are also harder to follow when the Super PAC is focused exclusively on one race. Therefore, this approach carries with it some real legal risk. To avoid a charge that the campaign has engaged in soft money fundraising indirectly through an agent, we (or, more precisely, the campaign fundraising agent) would have to demonstrate that her or his activities on behalf of the Super PAC supporting Secretary Clinton were not undertaken on behalf of Secretary Clinton. The absence of any FEC-endorsed safe harbor approach makes this a harder task. Even explicit instructions to campaign agents to avoid soft money fundraising may not be sufficient. The FEC has opined that the candidate/principal may also be liable for any impermissible solicitations by the agent, despite specific instructions not to do so. 9 C. Rely on Two Hats Allowance Only for Certain Persons The final option would be to generally follow the no overlapping agents rule, but make limited case-by-case exceptions for individuals who can credibly argue that their position or title outside HFA allows them to serve as a campaign fundraising agent, on the one hand, but also solicit soft money for the Super PAC in an entirely separate capacity. A good example might be a nonfederal officeholder. Officeholders regularly solicit funds for candidates, political parties, and PACs, and it is understood that they are doing in their capacity as a prominent Democratic elected official. Another example might be a prominent Democratic fundraiser who had solicited funds for the Super PAC in past election cycles. Here, too, it could be credibly argued that the person had a longstanding role as a fundraiser for that Super PAC separate and apart from any role as an HFA agent. This approach is riskier than the pure no overlapping agents approach. However, there are some good FEC precedents in our favor. For instance, the FEC has said that a candidate s son could raise soft money for the state party as long he did so in his own capacity as a state official of Nevada and exclusively on behalf of the State Party, and not on the authority of any Federal candidate. 10 Likewise, the FEC has also said that an officeholder's Chief of Staff, who also served as chairman of the state party, could legally solicit soft money as long as he did so in his own capacity and exclusively on behalf of the State Committee, and not on the authority of 9 71 F.R. at 4978. 10 Advisory Opinion 2010-3. -4-
any Federal candidate. 11 In both of these examples, the person seeking to raise funds had a title and position distinct from his role as a fundraising agent for the federal officeholder; the FEC found it credible that this person could raise funds in this separate capacity. One final note of caution: if HFA is going to follow option A ( no overlapping agents ) or option C ( no overlapping agents with limited exceptions ), it may want to make only selective use of the allowance to ask campaign donors to raise hard money for Super PACs. As we discussed in a prior memo, it is legally permissible for an HFA staffer to ask supporters to bundle hard money for Super PACs. Nonetheless, that request (if accepted) makes the supporter a fundraising agent of the campaign and thereby makes it harder for that person to raise soft money for that Super PAC in a legally permissible way. One approach may be limiting that ask to those persons who we believe can credibly wear two hats. We look forward to discussing, once you have had the opportunity to review. 11 Advisory Opinion 2007-5 (Iverson). See also Advisory Opinion 2006-8 (Brooks) ("If the individuals are not acting on behalf of any Federal candidate or officeholder or any political party committee while participating on the Board of Directors, then the corporation would not be considered to be directly or indirectly established, financed, maintained, or controlled by the Federal candidate or officeholder or political party committee."). -5-