Key Takeaway: Last week, the Federal Election Commission (“FEC”) approved a request from the Elias Law Group to allow federal candidates and officeholders to raise funds into state PACs under a separate contribution limit from funds raised into their federal leadership PACs, provided the state PAC does not engage in federal election activity. In raising funds, the state PAC must still comply with the federal source restrictions and contribution limits under the Federal Election Campaign Act, as amended (“FECA”).
On behalf of Senator Catherine Cortez Masto, Elias Law Group submitted an advisory opinion request to the FEC with the goal of establishing that a federal candidate or officeholder can raise under two separate contribution limits for a state PAC and a federal leadership PAC, thereby doubling the amount an individual donor can give to support the candidate or officeholder’s political giving. Specifically, the request asked if Senator Cortez Masto could establish a Nevada political committee to raise and spend funds only in connection with nonfederal elections in Nevada (the “state PAC”) without aggregating a donor’s contributions to the state PAC and the Senator’s federal leadership PAC for contribution limits purposes (meaning funds given to the state PAC would not count against the federal PAC contribution limit and vice versa).
For years, federal candidates and officeholders have established state and local political committees that engage solely in state and local election activity. However, FECA treats entities established, financed, maintained, or controlled by the same person as “affiliated committees.” Contributions made to or by affiliated committees are generally considered to have been made to or by a single committee. Therefore, in the absence of clear guidance from the FEC, federal candidates and officeholders have traditionally not been able to raise funds into the state PACs they establish without first aggregating the funds with contributions received by the same sources to their federal leadership PACs. This limited the funds that a state PAC and federal leadership PAC established by the same candidate or officeholder could receive to only $5,000 from the same source in a calendar year.
Last week, for the first time, the FEC made clear that a state PAC engaging solely in state and local election activity may raise and spend funds under a separate contribution limit from the federal officeholder’s leadership PAC. The FEC concluded that the state PAC would still be “affiliated” with a federal leadership PAC established by the same candidate or officeholder, but that funds received to the state PAC solely for state and local election activity are not “contributions” as defined under FECA. Therefore, funds received by the state PAC are not subject to the aggregation rules for contributions received by the federal officeholder’s leadership PAC.
Note that under a separate prohibition in FECA, a state PAC that is established by a federal candidate or officeholder may only raise federally permissible funds – meaning up to $5,000 per calendar year from federally permissible sources. These amount and source limitations apply regardless of looser state rules, but the state PAC would still need to comply with a lower contribution limit or additional source restrictions imposed by state law.
Taken together, this means that Federal candidates and officeholders may now establish state political committees and raise up to $5,000 per calendar year for the state political committee from any federally permissible source, subject to stricter state contribution limits or source restrictions. They may also raise an additional $5,000 per calendar year from the same source for their federal leadership PAC. For this allowance to apply, the state PAC must only raise and spend funds for nonfederal election activity (for example, contributions to state and local candidates and supporting or opposing state or local ballot measures).
Any specific activities or plans should be discussed with counsel.