Can Tim Bee Amass a Campaign War Chest Without Declaring His Candidacy?

Tim Bee is being very cagey and playing a delicate game by refusing to resign his Arizona Senate seat even as he admittedly raises significant funding for a race against Gabby Giffords for Arizona’s CD8 Congressional seat. Bee is arguably on safe legal ground under state law, but the office he seeks is governed by federal law, which isn’t as forgiving.

Arizona has a resign to run constitutional clause that requires declared candidates to resign their state office if they are not in the last year of their term. Tim Bee won’t be in his last year until January, so he can’t officially declare until then without resigning his seat in the Arizona Senate.

An important question becomes "what makes a declared candidate under Arizona law?" The answer to that seems clearly to be that you have to actually say you are a candidate, or file nomination papers with the state, according an Attorney General opinion from Grant Woods’ term. So, under state law, Bee might be within the law no matter how much money he raises, as long as he doesn’t declare or file.

But Bee is running for a federal office and therefore also has to comply with federal campaign finance law and Federal Election Commission regulations. The rules as to when he becomes an official candidate are not the exclusive province of Arizona law. In fact, Arizona law specifically defines a candidate for the purposes of election law as a person who is running for a non-federal office. So, what does federal law say when it comes to when a candidate is "declared"?

The Federal Election Campaign Act also deals with the issue of when a candidate becomes "declared" and thus subject to filing requirements. Under the Act, a federal candidate may "test the waters", as Fred Thompson is currently doing in his Presidential bid, for a limited time to gauge support for one’s candidacy without the trouble of filing federal financial disclosures. The purpose is that if the potential candidate decides against running, he never has to bother filing the funds donated to and expended by his campaign committee; the federal government doesn’t care, because that potential candidate never became a candidate. Clearly, this exception to financial disclosure is ripe for abuse by a candidate who fully intends to run, but who wants to dwell in the "testing the waters" limbo to keep his finances under wraps for as long as possible. 

The federal law doesn’t just have a bright-line rule like Arizona’s law, so it is harder to game the system. Where under Arizona law a "declared" candidate may be one who has announced or filed papers, the federal law looks objectively at what a potential candidate does to determine if "testing the waters" has ended and the candidate has declared.

Some of the activities that will move a candidate from an exploration of candidacy to "declared" candidate include:

• Raises funds in excess of amounts reasonably required for
  exploratory activity or amasses funds to be used after candidacy is
  established;
• Conducts activities over a protracted period of time or shortly before the election;
• Uses public political advertising to publicize his or her intention to campaign;
• Makes or authorizes statements that refer to him or her as a candidate; or
• Seeks ballot access.

Actual filing of candidacy papers is but one measure of a declared candidate under the federal rules. Much more important is the potential candidate’s financial behavior. If Bee is raising significant funds, or if he is raising funds that are clearly for purpose of building a war chest for an electoral contest, not to help him "test the waters", then he is a candidate under federal law no matter what he might say publicly.

Tim Bee has not filed committee formation papers with the FEC, nor yet made any financial disclosures with either the FEC or the IRS that I have been able to find, so we don’t know how much he has raised, or what he has spent it on. I am willing to assume that Bee is in the exploratory phase of his candidacy, and that certainly seems consistent with his public statements that he is exploring the support for his potential candidacy. But Federal law only allows him to raise a limited amount of money to enable him to pay for activities reasonably related to that purpose, such as polling, hiring some consultants, traveling to meet potential supporters and donors, etc.

As the FEC complaint against Fred Thompson for abusing the "testing the waters" phase illustrates, the law does recognize some limits on how long one can remain in the "testing the waters" phase, on what you can do, say, and spend money on, and on how much you can raise before having to file.

The federal threshold at which a federal candidate must generally begin to file disclosures and become an official "declared" candidate under federal law (as opposed to the very pro-forma Arizona requirements) is raising over $5,000 dollars. The reason for this is obvious. Above that arbitrary limit it becomes increasingly likely that, if a candidate is not subject to disclosure, he will violate the spirit of the "testing the waters" exception, despite whatever he may say publicly.

Thompson’s case illustrates that even when one raises significant money (in Thompson’s case, IRS filings indicate that he has raised substantially more than $3 million), one does not automatically become a candidate, but the complaint against him illustrates that he is probably bending the rules considerably by not filing with the FEC like a "declared" candidate at this point. And Thompson’s announced intention to declare formally this week is a good indication that the FEC complaint wasn’t wide of the mark; Thompson was almost certainly violating FEC rules.

Sources within the Arizona GOP assure me that Bee has already far exceeded the $5,000 threshold of FEC rules. Given that he is expected to need at least $1 million for a credible challenge, that seems quite reasonable. So, can Bee amass a significant war chest for a run while in the "testing the waters" phase under federal campaign finance law? And if Bee is forced to file disclosure with the FEC and the IRS, ending his "testing the waters" phase, can he still remain an undeclared candidate under state law for the purposes of the constitutional resign to run clause?

I don’t know if there is a definitive answer to these questions. The legal structure of our electoral system has many gaps and seams such as this one. The reason is that often the limits of the legally acceptable haven’t yet been explored by a sufficiently devious and motivated candidate. It is only when candidates push the law in an attempt to game the system and exploit its gaps for their own partisan gain that the limits of the law become apparent.

In this case, Bee is clearly trying to steal a march by remaining in a very influential office while running for office yet remain free of financial disclosures as he builds his war chest. He is trying to have his cake and eat it, too. Bee wants to have it both ways, and while it looks like Arizona law may be inadequate to stop him, the federal office he seeks imposes a federal set of rules that he’ll be hard-pressed to side-step.

If Bee continues to stockpile funds for his bid for Congress while holding an Arizona office outside our constitutional bounds, an FEC complaint should be filed against him for abusing the "testing the waters" phase in an attempt to avoid becoming a "declared" federal candidate.