FEDERAL ELECTION COMMISSION

 WASHINGTON, D.C. 20463 

BEFORE THE FEDERAL ELECTION COMMISSION

In the Matter of ) 

 ) 

Howard Schultz ) MUR 7567 

 ) 

 

STATEMENT OF REASONS OF VICE CHAIR ALLEN DICKERSON AND 

COMMISSIONERS SEAN J. COOKSEY AND JAMES E. “TREY” TRAINOR, III

In this matter, we voted to approve the Office of General Counsel’s recommendations to 

dismiss the allegation that Howard Schultz violated 52 U.S.C. §§ 30102(e)(1), 30103, and 30104 

by failing to register and report as a candidate. 

For the purposes of 52 U.S.C. § 30109(a)(8), we attach our proposed Factual and Legal 

Analysis in this matter.

__________________________________ December 3, 2021 

Allen Dickerson Date

Vice Chair

_________________________________ December 3, 2021 

Sean J. Cooksey Date

Commissioner

_________________________________ December 3, 2021 

James E. “Trey” Trainor, III Date

Commissioner

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FEDERAL ELECTION COMMISSION

FACTUAL AND LEGAL ANALYSIS

RESPONDENT: Howard Schultz MUR: 7567 

 

I. INTRODUCTION

This matter was generated by a Complaint filed with the Federal Election Commission 

(the “Commission”). The Complaint alleges that Howard Schultz, former CEO of Starbucks, 

violated the Federal Election Campaign Act of 1971, as amended (the “Act”), by failing to 

register and report as a candidate for U.S. President, contending that Shultz went beyond testing 

the waters by hiring political consultants, conducting polling, and laying the groundwork for paid 

advertising. From late January 2019 through mid-April, Schultz maintained a high public profile 

through interviews, town halls, and social media posts; however, from mid-April through 

September 6, 2019, the date when Schultz officially declared his intention not to run, Schultz 

receded from public life amid health concerns and a crowded Democratic primary field. 

The Commission dismisses the allegation that Schultz violated 52 U.S.C. §§ 30102(e)(1), 

30103, and 30104 by failing to register and report as a candidate because the available record 

indicates that Schultz’s expenses do not appear to have gone beyond testing the waters. 

II. FACTUAL BACKGROUND

 On January 27, 2019, Schultz, the former CEO of Starbucks Corporation, announced on 

CBS’s 60 Minutes that he was “seriously thinking of running for president” as a “centrist 

independent.”1

 Schultz indicated that he would promote his memoir while deciding whether to 

1

 Compl. at 1 (Feb. 14, 2019); 60 Minutes Interview at 0:12-17, CBS (Jan. 27, 2019), 

https://www.youtube.com/watch?v=gnBhtwKRFhA. 

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run for President and was willing to spend his personal fortune on his potential campaign.2 The 

Complaint alleges that Schultz became a federal candidate because a news article at the time 

reported that he had hired political consultants, conducted polling, and laid the “groundwork for 

paid advertising that could debut in the next two months.”3

 

 In late January, Schultz’s website principally contained marketing for his book, From the 

Ground Up, including an active book tour schedule traveling around the country.4

 In the 

following months, in addition to promoting his book, Schultz also discussed a potential 

campaign in televised town halls, speeches, news programs, and social media. For example, on 

February 12, 2019, Schultz discussed his positions on political issues at a televised town hall on 

CNN, stating that he was exploring a run, but had not yet made a decision whether to run.5

 

 Schultz officially declared that he would not run for president on September 6, 2019.6

 In response, Schultz asserts that he was testing the waters because he publicly stated on 

several occasions that he was only evaluating a run and never actually decided to run.7 Schultz 

further asserts that, despite the allegation that he had laid the groundwork for political 

2

 Lisa Lerer, Is Howard Schultz a Candidate Without a Constituency?, N.Y. TIMES, Jan. 28, 2019, 

https://www.nytimes.com/2019/01/28/us/politics/on-politics-howard-schultz-starbucks-independent.html; Compl. at 

2. 

3 Compl. at 2 (citing Michael Scherer, Howard Schultz’s presidential ambitions spurred a months-long effort 

to disrupt the 2020 race, WASH. POST, Jan. 29, 2019, https://www.washingtonpost.com/politics/howard-schultzspresidential-ambitions-spurred-a-months-long-effort-to-disrupt-the-2020-race/2019/01/29/30a22154-2408-11e9-

ad53-824486280311_story html). 

4

 Howard Shultz, (Jan. 31, 2019), 

https://web.archive.org/web/20190131032136/https://www howardschultz.com/.

5

 Town Hall with Howard Schultz, CNN (Feb. 13, 2019), 

https://www.youtube.com/watch?v=A45CoomULVc.

6

 Greg Jaffe and Michael Scherer, Former Starbucks chief executive Howard Schultz announces he will not 

run for president, WASH. POST, Sept. 6, 2019, https://www.washingtonpost.com/politics/former-starbucks-chiefexecutive-howard-schultz-announces-he-will-not-run-for-president/2019/09/05/230b0fa2-d046-11e9-87fa8501a456c003_story html. 

7

 Resp. at 2 (Apr. 12, 2019).

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advertising, he never actually disseminated any ads “to publicize his intention to campaign for 

Federal office” as set forth in Commission regulations.8

 Moreover, Schultz argues that expenses 

for polling and the hiring of consultants to evaluate a potential bid are traditional testing-thewaters expenses.9

III. LEGAL ANALYSIS

An individual becomes a candidate under the Act when: (a) such individual receives 

contributions or makes expenditures in excess of $5,000; or (b) such individual gives his or her 

consent to another person to receive contributions or make expenditures on behalf of such 

individual and if such person has received such contributions or has made such expenditures in 

excess of $5,000.10 Once the $5,000 threshold has been met, the candidate has 15 days to 

designate a principal campaign committee by filing a Statement of Candidacy with the 

Commission.11 The principal campaign committee must file a Statement of Organization within 

ten days of its designation,12 and it must file disclosure reports with the Commission.13 

The Commission has established “testing-the-waters” regulations excepting from the 

definitions of “contribution” and “expenditure” funds received and payments made solely to 

determine whether an individual should become a candidate, thereby permitting an individual to 

test the feasibility of a campaign for federal office without becoming a candidate under the Act.14 

8

 Id. at 3

9

 Id. at 4.

10 52 U.S.C. § 30101(2). 

11 52 U.S.C. § 30102(e)(1); 11 C.F.R. § 101.1(a). 

12 See 52 U.S.C. § 30103(a); 11 C.F.R. § 102.1(a).

13 52 U.S.C. § 30104(a), (b). 

14 See 11 C.F.R. §§ 100.72 and 100.131. 

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These testing-the-waters regulations seek to draw a distinction between activities directed to 

evaluating the feasibility of one’s candidacy and conduct signifying that a decision to become a 

candidate has been made.15 Testing-the-waters activities include, but are not limited to, 

payments for polling, telephone calls, and travel, and only funds subject to the Act’s source and 

amount prohibitions may be used for such activities.16 

An individual who is testing the waters is not required to register or file disclosure reports 

with the Commission unless and until the individual subsequently decides to run for federal 

office.17 However, an individual who tests the waters must keep financial records, and if he or 

she becomes a candidate, all funds received, or payments made in connection with testing the 

waters must be reported as contributions and expenditures in the first report filed by the 

candidate’s principal campaign committee.18 

The testing-the-waters exceptions are not available to an individual who has decided to 

become a candidate.19 Commission regulations set forth a non-exhaustive list of activities that 

indicate when an individual is no longer testing the waters and has decided to become a 

candidate. Such indicia include: (1) using general public political advertising to publicize his or 

her intention to campaign for federal office; (2) raising funds in excess of what could reasonably 

be expected to be used for exploratory activities or undertaking activity designed to amass 

campaign funds that would be spent after he or she becomes a candidate; (3) making or 

15 See Advisory Op. 1981-32 (Askew) (“AO 1981-32”). 

16 Id. 

17 Id; see also Advisory Op. 2015-09 (Senate Maj. PAC, et al.) (“AO 2015-09”). 

18 11 C.F.R. § 101.3.

19 See AO 2015-09 at 5. See also Payments Received for Testing the Waters Activities, 50 Fed Reg. 9,992, 

9,993 (Mar. 13, 1985) (exemption “explicitly limited ‘solely’ to activities designed to evaluate a potential 

candidacy”).

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authorizing written or oral statements that refer to him or her as a candidate for a particular 

office; (4) conducting activities in close proximity to the election or over a protracted period of 

time;20 and (5) taking action to qualify for the ballot under state law.21 

Once an individual has decided to be a candidate, he or she must designate a principal 

campaign committee within 15 days, which must file a Statement of Organization within ten 

days of being designated by the candidate.22 The committee must establish a separate segregated 

fund, maintain a record of all contributions received and expenditures made while testing the 

waters, and disclose all receipts and disbursements in the committee’s first financial report filed 

with the Commission.23 All funds raised and spent for testing-the-waters activities are subject to 

the Act’s limitations and prohibitions.24 

In determining whether an individual has moved from testing the waters to candidate 

status, the Commission considers whether the individual has engaged in activities or made 

statements that would indicate the individual has decided to run for federal office.25 “[T]he 

determination of whether an individual has crossed the line from ‘testing the waters’ to 

campaigning must be made on a case-by-case basis.”26  

20 The Commission has advised that there is no specific time limit for such activities, and the length of time 

spent testing the waters is but one factor in determining whether an individual becomes a candidate. AO 2015-09 

at 6. 

21 11 C.F.R. §§ 100.72(b), 100.131(b). 

22 See 52 U.S.C. §§ 30102(e)(1), 30103(a), 30104(a).

23 52 U.S.C. §§ 30102(b), 30104(a); 11 C.F.R. § 101.3.

24 11 C.F.R. §§ 100.72(a); 100.131(a). 

25 Factual & Legal Analysis at 6-7, MUR 6449 (Jon Bruning); First Gen. Counsel Rpt. at 10, MUR 6533 

(Perry Haney for Congress).

26 50 Fed. Reg. at 9,993.

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Here, the available information does not indicate that Schultz decided to become a federal 

candidate before formally declaring his intention not to run. The Complaint bases its allegation 

that Schultz became a candidate primarily on the first factor — that Schultz was “laying the 

groundwork for paid advertising,” arguing that even in the absence of any public statement that 

Schultz had become a candidate, expenditures for political advertising would be sufficient to 

trigger candidacy.27 In his Response, Schultz argues that he did not run any ads specifically for 

the purpose of publicizing “his intention to campaign for Federal office” as set forth in 

Commission regulations.28 The Complaint did not identify any specific ads. 

 Second, the Commission does not have any information regarding Schultz’s fundraising 

or spending. There is no allegation in the Complaint that Schultz raised or spent a significant 

amount of money. News reports indicate that Schultz committed to spending $300 to $500 

million of his personal funds if he ran, suggesting that Schultz was not actively fundraising.29 In

27 Compl. at 4.

28 Resp. at 3.

29 Compl. at 2 (citing Michael Scherer, Howard Schultz’s presidential ambitions spurred a months-long effort 

to disrupt the 2020 race, WASH. POST, Jan. 29, 2019, https://www.washingtonpost.com/politics/howard-schultzspresidential-ambitions-spurred-a-months-long-effort-to-disrupt-the-2020-race/2019/01/29/30a22154-2408-11e9-

ad53-824486280311_story html.

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any event, the Commission has found that raising significant amounts of money, without other 

indicia of candidacy, is not sufficient to trigger candidacy.30 

 Third, Schultz’s activity predated the first primaries by more than a year and lasted only 

several months and thus was not in close proximity to the election or over a protracted period of 

time.31 

 While not directly relevant to any one factor, the Complaint also alleges that Schultz 

conducted polling and hired political consultants.32 The Complaint, however, does not explain 

how these activities establish candidacy, in contrast to reflecting permissible testing-the-waters 

activity. Polling, for example, is an explicitly enumerated testing-the-waters activity,33 and the 

Commission has previously found that expenses for polling and consultants can be valid testingthe-waters expenses if done to explore a run.34

 In sum, the available information does not establish that Schultz had made the private 

decision to run and therefore had become a candidate. Instead, Schultz’s contemporaneous 

public statements that he was exploring a potential run, and his ultimate decision not to run, 

indicate that Schultz never made the private decision to run. Therefore, because Schultz’s 

expenses appear to have been for testing the waters and due to the lack of countervailing 

30 See, e.g., Factual and Legal Analysis at 6 n.11, MUR 6533 (Haney) (dismissing 30102(e)(1) allegation 

where candidate’s committee had received almost $112,000, primarily in the form of loans from the candidate);

Factual and Legal Analysis at 6, MUR 6224 (Carly Fiorina) (finding no reason to believe where exploratory 

committee raised $225,000, and candidate spent $400,000 in personal funds); MUR 5934 (Thompson) (dismissing 

where candidate had raised more than $12 million and spent more than $5 million); MUR 5703 (Rainville) (finding 

no reason to believe where $100,000 raised was not dispositive); MUR 5661 (Butler) (same).

31 Factual and Legal Analysis at 6, MUR 6948 (Nancy Rotering for Congress) (finding no reason to believe 

where, inter alia, the activity occurred more than one year before the primary).

32 Compl. at 2.

33 11 C.F.R. § 100.131(a).

34 See, e.g., Advisory Op. 1982-03 (Cranston) at 4-5 (hiring of political consultants can be for testing the 

waters if the candidate had not yet decided to run).

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information in the available record, the Commission dismisses the allegation that Schultz 

violated 52 U.S.C. §§ 30102(e)(1), 30103, and 30104 by failing to register and report as a 

candidate. 

MUR756700059