AO 2014-06: Campaign and leadership PAC may purchase and distribute book

Rep. Paul Ryan’s campaign committee and leadership PAC may purchase, distribute and promote the Congressman’s book, subject to certain requirements described in the advisory opinion. As proposed, the activity will not result in an impermissible personal use of campaign funds, nor will the publisher’s discounted sale of the book to the committees result in a prohibited corporate contribution.

Background

Rep. Paul Ryan is a member of the U.S. House of Representatives and a candidate for the First Congressional District of Wisconsin. His principal campaign committee is Ryan for Congress and his leadership PAC is Prosperity Action (the Committees).

Grand Central Publishing (the Publisher) plans to publish and market a book authored by Rep. Ryan entitled The Way Forward. Rep. Ryan’s agreement with the Publisher provides for the payment of royalties based on an “industry-standard” percentage of net sales revenue with no advance payment of royalties to the Congressman.

The Committees intend to purchase copies of the book from the Publisher at a discounted bulk rate to distribute to their supporters and contributors. The Publisher will donate any royalties generated by these purchases to a section 501(c)(3) charitable organization that is not associated with Rep. Ryan or his family.

The Committees also plan to promote the book on their websites and social media pages (such as Twitter and Facebook) by using one- to two-sentence references and hyperlinks directing readers to the Publisher’s website or to an online book seller. The cost of placing the promotional material on their website and social media pages would be de minimis or free.

Finally, Rep. Ryan intends to use personal funds to purchase or rent the email and mailing lists from Ryan for Congress and Prosperity Action in order to promote his book. Rep. Ryan will enter into separate list rental agreements with each committee to pay the fair market value for renting the lists.

Rep. Ryan, Ryan for Congress, and Prosperity Action ask several questions including: whether the Committees may use committee funds to purchase the book; whether the purchase would result in an in-kind contribution to the Committees from the Publisher; whether the Committees may promote the book on websites and social media pages if the cost of doing so is de minimis; whether Rep. Ryan may use the Committees’ mailing lists to promote his book if he pays the fair-market rental value for the lists; and whether the Publisher’s costs for the publication and promotion of the book are covered by the media exemption or are bona fide commercial activity.

Analysis

Under the Act and Commission regulations, an authorized committee may spend its funds to finance activities “in connection with the campaign for federal office of the candidate...” 2 U.S.C. § 439a(a)(1); 11 CFR 113.2(a). Such spending must not, however, result in the conversion of campaign funds to the personal use of the candidate or any other person. 2 U.S.C. §439a(b); 11 CFR 113.1(g), 113.2(e). Campaign funds are considered to be converted to personal use if the funds are “used to fulfill any commitment, obligation or expense of a person that would exist irrespective of the candidate’s election campaign or individual’s duties as a holder of Federal office.” 2 U.S.C. §439a(b)(2); 11 CFR 113.1(g).

Citing its previous decisions in AOs 2001-08 (Specter) and 2011-02 (Brown), the Commission concluded the campaign’s limited purchase of the book for distribution to contributors and supporters is not a personal use of campaign funds because it relates to Rep. Ryan’s reelection campaign and the resulting royalties will go to charity. The Commission also concluded that Prosperity Action can purchase copies of Rep. Ryan’s book directly from the Publisher for election-related distribution, but could not agree on the legal basis for this conclusion by four affirmative votes.

The Commission further determined that the Committees may purchase copies of the books as proposed directly from the Publisher at the standard discounted bulk rate. Under the Act and Commission regulations, the sale of goods or services at a discount does not result in a contribution if the discount is made available in the ordinary course of business and on the same terms and conditions to the vendor’s other customers that are not political organizations or committees. See, AOs 2004-18 (Lieberman); 2001-08 (Specter); 1996-02 (CompuServe); 1995-46 (D’Amato). As a result, the Publisher is not making an in-kind contribution to the Committees by offering them its normal bulk discount rate.

Likewise, the Commission approved the Committees’ request to promote the book by placing references to the book on their websites and social media pages of one or two sentences that include hyperlinks to the Publisher’s website or to online booksellers. Because the amount of material and cost of promoting the book is de minimis, no personal use will result. See AO 2006-07 (Hayworth). However, the Commission could not agree by the necessary four votes whether Prosperity Action could place additional promotional content on its website and social media sites at more than de minimis cost.

The Commission also concluded that Rep. Ryan’s purchase and use of the Committees’ email and mailing lists to promote his book will not result in personal use because he will pay the fair market value. Commission regulations provide that “the transfer of a campaign committee asset is not personal use so long as the transfer is for fair market value.” 11 CFR 113.1(g)(3). See also AOs 2011-02 (Brown); 2002-14 (Libertarian National Committee); 1982-41 (Dellums); and 1981-46 (Dellums).

Finally, the Commission found no indication that the Publisher seeks to influence a federal election, and noted that all of Rep. Ryan’s books would be sold at usual and normal sales prices. Therefore, the Publisher’s costs and expenses for publication and promotion of Rep. Ryan’s book are not subject to the Act’s regulation because they are bona fide commercial activity.

Date Issued: July 23, 2014; Length: 10 pages.

Resources:

• Advisory opinion 2014-06 [PDF]
• Commission discussion of AO 2014-06
• Concurring opinion issued by Chairman Lee E. Goodman and Commissioners Matthew S. Petersen and Caroline C. Hunter