“A Practical Guide to Registering an Independent Expenditure Committee for New York State Elections”
August 17, 2012
By Richard Winsten, Thomas Hartnett, and Deanne Braveman
Citizens United v. Federal Election Commission, decided by the United States Supreme Court in 2010, expanded the ways that unions can participate in elections. The Court found that restrictions placed on unions and corporations participating in independent expenditures violated the First Amendment’s protection of free speech. Therefore truly independent expenditures cannot be limited in amount as campaign contributions can be limited. The court, however, has upheld disclosure requirements for permissible independent expenditures in a line of cases. As a practical matter this allows unions to engage in unlimited spending for campaign activity (i.e. spending to support or oppose a candidate), subject to disclosure, where the candidate did not authorize, request, suggest, foster or cooperate with the unauthorized committee.
This article is meant to serve as a practical, nuts and bolts guide for unions interested in establishing and registering an independent expenditure campaign in New York State. Independent expenditures in New York State differ from those in federal elections because they are still subject to the contribution limits applicable to New York State elections as well as those limits placed on contributors. Of course, these limits are not explicit in the NYS election law and regulations and an interpretation can evolve as cases are presented. Also, the interpretation above may present constitutional issues. Because the State law is newly developing in this area and because New York State Law has severe criminal and civil penalties for missteps with respect to unauthorized committee contact with candidates and campaign, we strongly urge you to consult legal counsel before venturing into these waters.
Unfortunately, as we are seeing in the current Presidential and Congressional campaigns opponents of organized labor have jumped into independent expenditure with both feet. Union friendly candidates are in danger of being overwhelmed by massive negative independent expenditures sponsored by billionaires, anti-union corporations and right-to-work front organizations. Unions cannot afford to sit on the sidelines; but they must participate in strict observance of the New York State laws and rules. Legal caution and prudence must be a priority for unions engaging in independent expenditure campaigns.
Independent expenditure committees in New York State are called “unauthorized committees.” These committees are different from the typical political action committees (PAC) because of the strict requirement that the unauthorized committee not coordinate with a candidate. Again, a candidate cannot authorize, request, suggest, foster or cooperate with an unauthorized committee in any of its activities.
An unauthorized committee can engage in the activities usually engaged in by PACs other than by making contributions to candidates. They can run advertisements for or against candidates, reach out to voters, etc. These unauthorized committees can use what are commonly thought of as electioneering words such as support or oppose candidate x. They are not limited to non-partisan voter participation or issue oriented messages. Unauthorized committees must comply with all New York State laws related to registration of the committee and reporting of receipts and spending and activities.
Unlike independent expenditures in federal elections there are contribution limits on NYS unauthorized committees. The NYS BOE has interpreted the law to apply contribution limits for the primary and general elections of statewide and legislative elections to unauthorized committees. Contribution limits for these elections are set each cycle by the BOE and are available on their website. Unauthorized committees are subject to these limitations as well as those placed on the contributor. Maximum contributions to an unauthorized committee are based on what elections the unauthorized committee is registered with the BOE to participate in. If an unauthorized committee is registered to participate in three senate primaries a contributor could give the maximum amount for three senate primaries. Where the contributor has reached the limit of the amount they can give for all elections an unauthorized committee cannot accept more than this limit.
UNAUTHORIZED COMMITTEE REGISTRATION
Registration of unauthorized committees for state elections must be completed before any receipt of funds or spending by the committee. Participants in local elections must also register with the required entity (i.e. New York City Board of Elections).The NYC Campaign Finance Board recently issued rules that purport to define independent expenditures in NYC campaigns and mandate disclosure of spending. These rules are now more specific than NYS election laws and rules.
This article will focus on state elections (Governor, Lieutenant Governor, Attorney General, Assembly and Senate) and the registration and filings required to be completed with the New York State Board of Elections (BOE). Registration must be done within five days of picking a treasurer and a depository bank.
Two forms are necessary to register an unauthorized committee. Form CF-02 is the Committee Registration Treasurer and Bank Information form. When filing this form for a new registration you must indicate what level of government the unauthorized committee will be working on (state or local campaigns). In Section A the name of the committee as well as any acronym associated with it are indicated. Section B asks for the committee type, in the case of an unauthorized committee you would report “9 – unauthorized committee”.
Section C requires information on the treasurer of the unauthorized committee. The person designated here will be individually legally responsible for completing the required filings and ensuring that information is correct on these filings. Personal information for the treasurer such as name, address, mailing address and phone numbers are required. The form asks for the social security number of the treasurer, reporting this information is optional.
Section D requires a depository/bank to be designated. The bank account does not have to be opened prior to registration. Some banks require proof of registration with the BOE prior to opening an account for an unauthorized committee. You must report the bank and the branch you intend to use on your registration. The bank must be licensed to do business in New York and the branch you use must be located in New York State.
In order to open the bank account for your unauthorized committee you will need a tax id number from the Internal Revenue Service (IRS). The number you need is an “employer identification number” commonly referred to as an “EIN.” This number can be applied for online or by telephone. If you apply online you will receive your number immediately.
The remainder of the CF-02 requires you to list which elections the unauthorized committee will be working on. Information required includes the candidates to be supported or opposed and the ballot issues to be supported or opposed. Anyone other than the treasurer who is authorized to sign checks must be indicated as well. When completed the form is signed by the treasurer.
The second form required for registration of an unauthorized committee is a CF-03. This form designates the committee authorization status. An unauthorized committee would fill out section B of this form indicating that the committee is not authorized by the candidate. You must include the date of election, office/district, and the candidate’s full name. This form is signed by the treasurer and must be notarized. Both forms must be sent to the BOE with original signatures.
Upon receipt of the forms by the BOE they will be reviewed. If the forms are complete a packet will be issued to the treasurer and mailed to the mailing address provided on the CF-02 form. The usual turn around time is about a week but can be longer, particularly around busy times for the BOE (reporting periods and elections). Your registration packet will contain your filer id number and information on required reporting and filings. You may not spend or receive money until you have received this information acknowledging your registration.
Amendments to both forms are required when there are any changes to information covered by the form. When amending either form be sure to provide your filer id number. CF-02 should be amended when there are any changes to contact information for the treasurer or any changes on contact information for individuals authorized to sign checks. An amended CF-03 form is necessary when there are changes to the candidates that your unauthorized committee will be supporting or opposing. When amending the CF-03 to add an election that your unauthorized committee is working on you must list all elections that the committee is working on. It is not sufficient to submit an amendment containing only the new election. When you make changes to the elections your unauthorized committee is working on you will only need to amend the CF-03 and submit with the original signatures of the treasurer and the notary.
REQUIRED REPORTING AND FILINGS
There are two types of filings associated with unauthorized committees: periodic filings and election related filings. Both types of filings require you to report activities of the committee related to receipts and expenditures. There are two periodic reports due in January and July of each year. Election related filings include a 32 day pre election filing, 11 day pre election filing, and a post election filing (10 day for primary and 27 day for general election). Post election filings must include copies of campaign materials purchased or produced. Originals are not required, but pictures of buttons or signs and transcripts of radio and television advertising are acceptable. In addition there are 24 hour filings that require a committee to report any contribution or loan over $1,000 within 24 hours of receipt. These filings are required after the 11 day filing cut off until the election.
Committees working on campaigns for state office must complete these filings electronically. The BOE has an electronic filing system (EFS) that committees working on state elections must use. The information required by these filings is similar to that on form CF-01. The software doesn’t directly correspond with the form, but the form can help you to keep track of items that need to be reported. Each year the BOE releases a calendar specifying the due dates for each filing that can be found on its webpage. Each period covers the day after the cut off date of the previous report up to and including the cut off date for the report you are making.
Filings are required even when your unauthorized committee has no receipts or expenditures to report. An unauthorized committee is not allowed to file an “in-lieu-of statement” but may file a “no-activity report” (form CF-18) in this case. All filings must be completed, even if there are no receipts or expenditures, until the committee is terminated. The treasurer is responsible for the completion of all reports as well as termination of the committee when necessary. If the treasurer for your unauthorized committee changes you must contact the BOE and complete the required paperwork to change the treasurer.
Unauthorized committees can be used by unions to effectively participate in elections. Unions must be careful to not coordinate with the candidate. Unauthorized committees that coordinate with a candidate run the risk of being determined to be authorized which would apply contribution limits to them on what they could accept. An unauthorized committee found to be coordinating with a candidate can face huge fines and potential prosecution.
About the Authors
Richard D. Winsten is Co-Chair of Meyer, Suozzi, English & Klein, P.C.’s Government Relations practice, based in the New York State capital of Albany. Thomas F. Hartnett is Co-Chair of the firm’s Government Relations practice and a part of the firm’s Labor practice in the Albany office. Deanne M. Braveman is an Associate, where she also practices with the firm’s Government Relations group in Albany.
All NYS BOE forms mentioned in this article, as well as the Campaign Finance Handbook and guides to using the Electronic Filing System, can be found at this website: http://www.elections.ny.gov/CampaignFinanceForms.html
Information on Employer ID Numbers, including where to apply for free online, can be found by going to www.irs.gov and searching for “Employer ID Numbers.”
The Campaign Finance Filing Calendar can be found on the NYS BOE Campaign Finance website located at http://www.elections.ny.gov/CampaignFinanceForms.html