January 4, 2005
James R. Sutton
The Sutton Law Firm
731 Sansome Street, 5th floor
San Francisco, CA 94111
Dear Mr. Sutton:
You have requested written advice from the Ethics Commission on several issues related to the filing obligations of major donors.
The Ethics Commission provides two kinds of advice: written formal opinions and informal advice. S.F. Charter § C3.699-12. Written formal opinions are available to individuals who request advice about their responsibilities under local laws. Formal opinions provide the requester immunity from subsequent enforcement action if the material facts are as stated in the request for advice, and if the District Attorney and City Attorney concur in the advice. See id. Informal advice does not provide the requestor immunity from subsequent enforcement action. See id.
Because your letter seeks general advice and does not pertain to particular persons or events, the Commission is treating your question as a request for informal advice.
Questions Presented and Discussion
1. Are individuals and business entities that qualify as “major donors” ever required to file major donor reports with the Ethics Commission?
Individuals and business entities that qualify as major donors may be required to file campaign reports with the San Francisco Ethics Commission. Under the Political Reform Act (“PRA”) and Campaign Finance Reform Ordinance (“CFRO”), major donors — individuals and business entities that make $10,000 or more in contributions in a calendar year — must disclose their contributions using FPPC Form 461. Cal. Gov’t Code §§ 82013(c) and 84200(b); S.F. Campaign and Governmental Conduct Code § 1.106; FPPC Information Manual E (rev. 1994) at p.3. A major donor committee must file a semi-annual statement for each half of the year in which it makes any contributions or independent expenditures. Cal. Gov’t Code § 84200(b); C&GC Code § 1.106. Semi-annual statements are due July 31 and January 31, with closing dates June 30 and December 31, respectively. See id. Major donors need not file a report if they have no activity after the activity reported on their last report. See id.
A major donor committee is a general purpose committee. Cal. Gov’t Code § 82027.5(a). Major donor committees that are active only in San Francisco elections are considered county general purpose committees. Ramirez Advice Letter, FPPC Adv. I-97-146 (1997). Section 84215 of the PRA sets forth where a county general purpose committee must file its campaign reports. In particular, subdivision (d) provides that “county general purpose committees shall file the original and one copy with the clerk of the county.”
Under the San Francisco Charter, the Ethics Commission is designated as the “clerk of the county” for these committees. Accordingly, San Francisco major donor committees (that is, major donor committees active only in San Francisco) must file their reports with the Ethics Commission. See Moll Advice Letter, FPPC File No. A-97-080 (1997); Sutton Advice Letter, FPPC Adv. A-01-184 (2001).
2. Are major donors who are active only in San Francisco required to file pre-election reports with the Ethics Commission if they contribute $500 or more to a San Francisco candidate during any month in the six months preceding an election? Is this filing requirement also triggered by contributions to ballot measure committees?
In general, county major donor committees are not required to file regular pre-election statements. Cal. Gov’t Code § 84200.5(d).[1] However, section 81009.5 (b) of the PRA authorizes a local filing agency to impose filing requirements additional to or different from those in the PRA on committees that are active only in the agency’s jurisdiction. One provision of local law, section 1.135 of the CFRO, may require San Francisco major donor committees to file pre-election reports. Section 1.135 provides:
SEC. 1.135. SUPPLEMENTAL REPORTING.
In addition to the campaign disclosure requirements imposed by the California Political Reform Act and other provisions of this Chapter, any committee that makes contributions or independent expenditures totaling $500 or more in a calendar month during the six months immediately preceding an election, to support or oppose a candidate for City elective office at that election, shall disclose, prior to the date of the election, all contributions and loans received and all expenditures made. The Ethics Commission shall prescribe the form, content and filing deadlines for theses statements. The Ethics Commission may require that these statements be filed electronically.
Section 1.135, formerly section 1.152(b), was enacted to address the problem that under state law committees that made expenditures in City races were required to file pre-election reports only in even-numbered years. As a result, significant spending in the mayoral race of 1999 went unreported until after the election. See Staff Memo on Proposed Amendments to the Campaign Finance Reform Ordinance for the May 30, 2002 Meeting at p. 11.
While the historical purpose behind section 1.135 appears to be to require the disclosure of information by recipient committees (those that receive contributions of $1,000 or more in a calendar year) or independent expenditure committees (those that make independent expenditures totaling $1,000 or more in a calendar year), it is not as clear that section 1.135 was enacted to require disclosure by major donors (those that make contributions totaling $10,000 or more in a calendar year to or at the behest of candidates or committees). Nonetheless, the plain language of section 1.135 states that the provision applies to “any committee that makes contributions or independent expenditures totaling $500 or more in a calendar month during the six months immediately preceding an election, to support or oppose a candidate for City elective office at that election.” C&GC Code § 1.135 (emphasis added). Because a major donor is, by definition, a committee, Commission staff has orally advised that if a major donor committee that is active only in San Francisco meets the requirements of section 1.135, it should file the Form 461 to report its activities during the pre-election cycle, in addition to the semi-annual reports due July 31 and January 31. Because section 1.135 refers only to “contributions or independent expenditures made to support or oppose a candidate for City elective office,” the filing requirements are triggered by contributions made to candidates, not by contributions to or expenditures for ballot measures.
Nonetheless, the language in section 1.135 makes clear that it is not self-executing. Instead, the Ethics Commission is required to prescribe the form, content and filing deadlines for the campaign statements, which the Commission has not done for major donor committees. Although we have orally advised that major donors should file Form 461 to report pre-election activity if they meet the requirements of section 1.135, we did so because we are conservative when providing oral advice. In providing written advice, we now conclude that there is presently no legal requirement that major donor committees file a form under section 1.135 because the Commission has not prescribed the requirements. In the upcoming months, the Commission will be considering amendments and regulations to the CFRO. At that time, it may consider whether to amend section 1.135 or whether to prescribe the form, content and filing deadlines for major donor committees that meet the reporting threshold in section 1.135. We will be pleased to receive your comments and suggestions as to how best to interpret and clarify section 1.135.
3. When will a major donor or PAC be deemed to be “active only” in San Francisco? Are major donors and PACs only required to file their reports with the Ethics Commission if 100 percent of their contributions go to San Francisco candidates, ballot measures or PACs?[2]
In the Moll Advice Letter, FPPC Adv. A-97-080 (1997), the Fair Political Practices Commission (“FPPC”) addressed the issue of when a committee is considered a committee “active only” in San Francisco. Noting that section 82027.5(c) of the PRA defines a “county general purpose committee” as one which “support[s] or oppose[s] candidates or measures voted on in only one county,” the FPPC advised that a county general purpose committee which conducts more than de minimis activity outside the county is not a committee which is “active only” in the county. It stated, “Whether a given activity is de minimis will necessarily depend on the overall activity and history of the committee. For example, a $100 contribution to a state-wide candidate would probably be considered de minimis for a committee with a history of making many, very large contributions to local candidates. Conversely, the same $100 contribution may be more than de minimis for a committee of modest means.” Because the CFRO incorporates the provisions of the PRA relating to local elections, except as otherwise provided or inconsistent with local law, the Commission follows the FPPC’s lead in ascertaining when a major donor committee is “active only” in San Francisco. Thus, a major donor committee or PAC may be required to file with the Ethics Commission even if less than 100 percent of its contributions are given to San Francisco candidates and ballot measures.
The FPPC may be considering legislative proposals that will, among other things, amend PRA section 82027.5 to specify what percentage of a committee’s activity makes it a “state,” “county,” or “city” general purpose committee. The draft proposal considers where a majority of the committee’s funds, exclusive of overhead, have been spent, and looks at the current year and previous calendar year for purposes of calculating the percentage. The Commission will be closely following the developments of these proposals, as any changes may alter the conclusion of this letter.
4. If a major donor is required to file reports with the Ethics Commission, is it also required to file these reports electronically? Must Forms 465, 496 and 497 also be filed electronically?
San Francisco’s Electronic Filing Ordinance applies only to a limited number of committees. See C&GC Code § 1.305(a). In particular, only committees that are required to file a statement of organization are required to file electronically. See id. Because major donor committees are not required to file a statement of organization (see Gov’t Code § 84101), they are not required to file reports with the Ethics Commission electronically.
You also inquire whether Forms 465, 496 and 497 must be filed electronically. As noted, major donor committees are not required to file any reports with the Commission electronically. If you are asking about the forms for other types of committees, at present, the only form that must be filed electronically is the Form 460.
San Francisco’s Electronic Filing Ordinance provides that whenever any committee is required by the PRA to file a semi-annual campaign statement, a pre-election campaign statement, a supplemental pre-election campaign statement, or a supplemental independent expenditure report with the Ethics Commission, the elected officer, candidate or committee must file at the same time a copy of the statement or report, in an electronic format prescribed by the Ethics Commission, provided the Ethics Commission has prescribed the format at least 60 days before the statement or report is due to be filed. C&GC Code § 1.300(a) (emphasis added). Subdivision (b) authorizes the Commission to require electronic copies of any additional campaign reports required by the PRA. It provides further, “Pursuant to San Francisco Charter Section 15.102, the Ethics Commission shall adopt regulations specifying the electronic filing requirements applicable to committees. The Ethics Commission shall adopt these regulations no fewer than 120 days before the electronic filing requirements are effective.” C&GC Code
§ 1.300(b).
The Commission has not yet prescribed forms or adopted regulations to require committees to file Forms 465, 496 or 497. Accordingly, the only campaign form that filers must file electronically with the Commission is the Form 460.
Finally, you raised concerns regarding the Commission’s online filing system. Staff has taken steps to address some of these concerns and will be pleased to discuss them with you.
I hope this information is helpful to you. If you have additional questions, please do not hesitate to let me know.
Sincerely,
John St. Croix
Executive Director
By: Mabel Ng
Deputy Executive Director
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[1] County major donor committees must file supplemental independent expenditure reports on the City and County’s pre-election filing schedule if they make independent expenditures totaling $1,000 or more to support or oppose a single candidate or measure. Gov’t Code § 84203.5. In addition, under section 1.134(c) of the San Francisco Campaign and Governmental Conduct Code, committees that make independent expenditures and that make expenditures or incur expenses of $5,000 or more in support of or in opposition to any candidate must file SFEC Form 134(c) within 24 hours of reaching the $5,000 threshold and each time they spend an additional $5,000. See C&GC Code § 1.134(c).
[2] It is not clear what you mean by “PACs,” as that term is used under federal law but not under state or local law. For the purposes of this letter, we assume that your use of the term PAC means general purpose recipient committees and our advice applies only to such committees.