Federal Election Commission Main Page
FEDERAL ELECTION COMMISSION
Washington, DC 20463
February 7, 2001
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 2000-40
The Honorable Jim McDermott
U.S. House of Representatives
Washington, DC 20515-4707
Dear Mr. McDermott:
This responds to your letter dated December 4, 2000,
requesting an advisory opinion concerning the application of
the Federal Election Campaign Act of 1971, as amended ("the
Act"), and Commission regulations to the establishment of a
legal expense fund and donations to the fund by other
Members of Congress using their principal campaign
committees.
You are a Member of the U.S. House of Representatives
from the Seventh District of Washington. You have set up a
legal defense fund named the Jim McDermott Legal Expense
Trust ("Legal Expense Trust " or "Trust") for the purpose of
paying legal expenses arising from the case of Boehner v.
McDermott, a matter which is now pending before the U.S.
Supreme Court. This fund is "separate and apart" from your
principal campaign committee. You state that Representative
Fortney H. (Pete) Stark of California and other members of
Congress have offered to donate excess campaign funds to the
Legal Expense Trust and have authorized you to ask whether
such donations would be permissible under the Act.
Factual Background
Boehner v. McDermott
This matter involves a civil suit against you filed by
Representative John Boehner of Ohio alleging that you
knowingly disclosed an unlawfully intercepted communication
in violation of the Electronic Communications Privacy Act at
18 U.S.C. 2511(1)(c), 2520. In December 1996, Mr.
Boehner, then the Chairman of the House Republican
Conference, participated, via cellular telephone from
Florida, in a conference call with several other House
Republican leaders. The participants discussed the
leadership's response to findings about to be issued by the
House Committee on Standards of Official Conduct ("Ethics
Committee") with respect to the conduct of Speaker Newt
Gingrich, and to the Speaker's expected agreement to accept
a reprimand and pay a fine. The suit alleges the following:
A Florida couple tape recorded the conversation from a
police scanner in their car, and later met with a Democratic
Representative from Florida to discuss the tape. At the
Member's suggestion, the couple personally delivered the
tape to you on January 8, 1997. You were then the ranking
Democratic Member of the Ethics Committee. On the next day,
you gave copies of the tape to three major newspapers, which
then ran stories on the party leaders' conversation.
Shortly thereafter, you provided a copy of the tape to the
other Members on the committee and resigned from the
committee. The committee chairman then delivered a copy to
the U.S. Department of Justice.
No criminal charges were brought against you.1 Mr.
Boehner filed the civil suit against you in U.S. District
Court in the District of Columbia in March 1998. In July
1998, the district court granted your motion to dismiss the
case, concluding that your actions were protected by the
First Amendment. Boehner v. McDermott, No. CIV. 98-594 TFH,
1998 WL 436897 (D.D.C. July 28, 1998). In September 1999,
the U.S. Court of Appeals for the D.C. Circuit reversed the
district court's decision and remanded the case back to the
district court. Boehner v. McDermott, 191 F.3d 463
(D.C.Cir.1999). You filed a petition for certiorari on
April 25, 2000. Certiorari has yet to be granted or denied.2
Legal Expense Trust Approved By House Ethics Committee
You enclose a copy of the letter from the House Ethics
Committee, dated October 6, 2000, that conditionally
approved the establishment of the Legal Expense Trust. You
also provided a copy of your September 21, 2000, letter to
the committee requesting approval of the establishment of
the Trust, along with a copy of the proposed agreement
establishing the Trust. The trust agreement between you, as
trustor, and another individual, as trustee, empowers the
trustee to accept funds, property, and services to pay legal
fees and charges with respect to the purposes described
below and Trust administration.
The agreement describes the purposes of the trust as
follows:
2. Trust Purpose. The sole and exclusive
purpose of the Trust is to provide a proper means
for the acceptance of money, property and
services, including, if necessary, pro bono legal
services, to provide for all reasonable, necessary
and appropriate legal fees or charges incurred by
the Trustor in connection with his official duties
and position in Congress, and matters bearing on
his reputation or fitness for office. To such
end, the Trust shall be available to pay all
reasonable, necessary and appropriate expenses of
the Trustor's counsel and such other and usual,
customary expenses that have been or may be
incurred in connection with the above-stated
purpose. The Trust may not be used to pay any
legal expenses that arise in connection with a
matter that is primarily personal in nature.
Trust funds may be used for no purpose other than
that specifically provided herein. All such
payments may be made by the Trustee from either
principal and/or income.
In granting you permission, the Ethics Committee noted
that the purpose of the Trust would be to pay legal expenses
arising from Boehner v. McDermott, and stated that "[y]our
letter further indicates that, consistent with the
requirements of the [Ethics Committee's] Legal Expense Fund
Regulations, these expenses have arisen in connection with
your official duties and position in Congress, and that the
matter is one that bears on your reputation or fitness for
office." The Ethics Committee also stated that the terms of
the Trust appeared to be consistent with the Legal Expense
Fund Regulations and went on to describe the public filing
and disclosure requirements for such legal expense funds.
The Ethics Committee specifically noted that the
purpose stated in the Trust agreement is broader than merely
the expenses for Boehner v. McDermott and that, consistent
with Ethics Committee regulations, the agreement states that
the Trust may not be used to pay any legal expenses that
arise in connection with a matter that is "primarily
personal in nature." The committee asked that you contact
it for further guidance if any question arises as to whether
a particular expense is properly payable out of the Trust.
The committee also stated its understanding that the Trust
agreement provides for the payment for legal service
provided to you only, and to no other individual.
Although not specifically addressed in the Ethics
Committee letter, the Commission also notes that the Trust
agreement provides that the trust assets shall be maintained
in accounts established for the exclusive purpose of
administering the Trust, and segregated from your "personal,
political, or official funds." In addition, it provides
that, upon completion of the Trust, any funds or assets
remaining in the Trust, shall be distributed by the Trustee,
in his sole and absolute discretion, to the contributors to
the Trust, on a pro rata basis.
Analysis
To respond to your question, the Commission must
discuss whether the donation of your campaign funds to the
Trust would be "personal use" under the Act and Commission
regulations, and then address whether the donation of
another Member's campaign funds to the Trust would
constitute "personal use" by that Member.
Under the Act and Commission regulations, a candidate
and the candidate's committee have wide discretion in making
expenditures to influence the candidate's election, but may
not convert campaign funds to the personal use of the
candidate or any other person. 2 U.S.C. 431(9) and 439a;
11 CFR 113.1(g) and 113.2(d); see also Advisory Opinions
2000-37, 2000-12, 1998-1, and 1997-27. Commission
regulations provide guidance regarding what would be
considered personal use of campaign funds. Personal use is
defined as "any use of funds in a campaign account of a
present or former candidate 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." 11 CFR 113.1(g). Moreover, 2 U.S.C.
439a and 11 CFR 113.2(a) and (d) specifically provide that
a Member of Congress may use excess campaign funds to pay
any ordinary and necessary expenses incurred in connection
with his or her duties as a holder of Federal office, and
may use such funds for "any other lawful purpose."
Commission regulations list a number of expense
categories that would constitute personal use. 11 CFR
113.1(g)(1)(i). Where a specific use is not listed as
personal use, the Commission makes a determination on a case-
by-case basis, using the regulation's definition of personal
use at 11 CFR 113.1(g). 11 CFR 113.1(g)(1)(ii).3 Legal
expenses are among those uses to be analyzed on a case-by
case basis. 11 CFR 113.1(g)(1)(ii)(A). See Advisory
Opinions 1998-1, 1997-27, 1997-12, and 1996-24.
Based on the underlying circumstances of Boehner v.
McDermott, the Commission concludes that the donation of
funds from your principal campaign committee, Friends of Jim
McDermott, to the Legal Expense Trust would be permissible
because it would entail the use of campaign funds for an
expense that would not exist irrespective of your duties as
a Federal officeholder. The conduct that is at issue in
Boehner v. McDermott resulted directly from activities that
you engaged in because of your position at the time as
Ranking Minority Member of the Ethics Committee. The issue
of the finding as to the Speaker's activities and the
resulting disciplinary action was a matter of great interest
in the House of Representatives. Any discussion by House
Republican leaders of how to react to the pending agreement
between the Speaker and the Ethics Committee would have been
of significant concern to you because of your position as
Ranking Member and your prior consideration of the Speaker's
activities as a member of the committee, and it appears that
you received the tape because of your position. See
Advisory Opinion 1997-27 where the Commission concluded that
Mr. Boehner could use campaign funds to finance his case
against you based on the fact that his involvement in the
conversation was in pursuit of his duties as a Member and as
part of the House Republican leadership, and the fact that
the unlawful interception or disclosure for which he seeks
the judicial remedy of compensation occurred as a result of
interest in the content, which related to the House
Republican leadership and the Ethics Committee, and interest
in the fact that the participants were House Republican
leaders.
The Commission concludes that the donation of your
campaign funds to the Trust is permissible on the condition
that the Trust's funds will be used only for: (1) expenses
related to Boehner v. McDermott or other legal expenses
arising out of the same set of facts; (2) the administrative
expenses necessary to administer the Trust (including
reasonable compensation to the Trustee); and (3) the
dissemination of funds remaining at the termination of the
Trust in accordance with the Trust agreement in order to
prevent the personal use of your campaign funds by others.
Any other use of funds by the Trust would present a
different set of facts requiring separate examination by the
Commission. The Trust agreement's requirement that Trust
accounts will be segregated from any other accounts, such as
your personal accounts, is also essential to the
Commission's opinion. The Commission notes that, even
though the Ethics Committee concluded or assumed that the
expenses "have arisen in connection with your official
duties and position in Congress," the Commission has the
authority to interpret and enforce the personal use
prohibition of 2 U.S.C. 439a and reach its own conclusions
as to whether personal use of campaign funds would result.
See Explanation and Justification, Expenditures; Reports by
Political Committees; Personal Use of Campaign Funds, 60
Fed. Reg. 7862, 7871 (February 9, 1995).
The regulations on personal use also address "third
party payments" to candidates at 11 CFR 113.1(g)(6).
Notwithstanding that the use of funds for a particular
expense would be a personal use under 11 CFR Part 113,
payment of that expense by any person other than the
candidate or the campaign committee shall be a contribution
under 11 CFR 100.7, unless the payment would have been made
irrespective of the candidacy. The regulations list three
examples of payments that are considered to be irrespective
of candidacy. One of the examples is "a donation to a legal
expense trust established in accordance with the rules of
the United States Senate or the United States House of
Representatives." 11 CFR 113.1(g)(6)(i). Therefore,
donations to the Jim McDermott Legal Expense Trust would not
be contributions, and would not be subject to the
contribution limitations and prohibitions of the Act. See 2
U.S.C. 441a, 441b, 441c, 441e, 441f, and 441g.
Commission regulations, nonetheless, do not
specifically address whether the donation of campaign funds
by one Member of Congress to a legal expense trust set up by
another Member would be a personal use of campaign funds by
the donor Member. Given the nature of the litigation for
which the Trust was established and the nature of the Trust,
the Commission concludes that donations of other Members'
campaign funds to the Trust would not constitute personal
use of campaign funds by those Members and would therefore
be permissible under 2 U.S.C. 439a and 11 CFR Part 113.
The case of Boehner v. McDermott implicates a dispute
between Members of Congress concerning the propriety of
actions that were taken with respect to a matter of concern
in the House of Representatives. This litigation may
present matters of institutional concern for all Members of
the House and may pertain to the conduct of each Member, in
his or her capacity as a Member of the House.
The nature of the Trust is also important to the
conclusion as to the use of Mr. Stark's campaign funds. The
Trust is established and maintained independently of your
campaign and of any other funds. It has been formed under
the House rules (Rule 26) and regulations issued by the
Ethics Committee which restrict a legal expense trust's
purposes, the sources and uses of donations, and the
disposition of any residual funds.4 Pursuant to the
conditions stated in this opinion, the dissemination and use
of the funds donated to the Trust are restricted in order to
prevent the personal use of campaign funds by you or others.
Most importantly, the funds in the Trust will be used
exclusively (other than for administrative costs and
dissemination at the end) for Boehner v. McDermott or legal
expenses arising out of the same set of facts. Under these
conditions, it is clear that Mr. Stark's donation of
campaign funds to the Trust will be used for expenses that
relate to Mr. Stark's interest as a Member of the House.
Thus, the donation by Mr. Stark of his campaign funds will
be made for an expense that would not exist irrespective of
his duties as a Federal officeholder. See 11 CFR 113.1(g).
Given the facts and conditions presented in your
request, the Trust may accept donations from the principal
campaign (or other authorized) committees of Mr. Stark and
other House Members. Such donations will not be
contributions under the Act; nor will they be a prohibited
personal use of campaign funds. Any authorized committee
that makes such donations to the Trust is, however, required
to disclose them as other disbursements on reports it must
file under the Act and Commission regulations.
2 U.S.C. 434(b)(4)(G) and (6)(A); 11 CFR 104.3(b)(2)(vi)
and (4)(vi).
The Commission expresses no opinion regarding the
application of any rules of the U.S. House of
Representatives or any tax ramifications of the proposed
activity because those issues are not within its
jurisdiction.
This response constitutes an advisory opinion
concerning the application of the Act, or regulations
prescribed by the Commission, to the specific transaction or
activity set forth in your request. See 2 U.S.C. 437f.
Sincerely,
(signed)
Danny L. McDonald
Chairman
Enclosures (AOs 2000-37, 2000-12, 1998-1, 1997-27, 1997-12,
and 1996-24)
_______________________________
1 The Florida couple pled guilty to unlawful interception
of the call, and they were fined.
2 The above account of the background for Boehner v.
McDermott was derived principally from the opinions issued
in the district and appellate court cases and from Advisory
Opinion 1997-27 in which the Commission concluded that Mr.
Boehner's use of his campaign funds to finance his suit
against you was permissible under 2 U.S.C. 439a and 11 CFR
Part 113.
3 In explaining the application of the case-by-case
approach, the Commission:
reaffirm[ed] its long-standing opinion that
candidates have wide discretion over the use of
campaign funds. If the candidate can reasonably
show that the expenses at issue resulted from
campaign or officeholder activities, the
Commission will not consider the use to be
personal use.
Explanation and Justification, Expenditures; Reports by
Political Committees; Personal Use of Campaign Funds, 60
Fed. Reg. 7862, 7867 (February 9, 1995).
4 The House rules and regulations impose a $5,000 yearly
limitation on donations from any individual or organization
and prohibit donations from registered lobbyists or agents
of foreign principals.