FEC Allows Federal Candidates and Officeholders to Establish State Leadership PACs: Advisory Opinion Authorizes Additional Committees with Separate Contribution Limits
On January 11, the FEC approved an advisory opinion allowing a federal candidate or officeholder to establish a state leadership PAC (S-LPACs) that will engage solely in state and local (i.e., nonfederal) elections and ballot measures. The new S-LPAC will have its own separate contribution limits, meaning contributions to the new committee will not count against a donor’s limit to the candidate’s or officeholder’s existing federal leadership PAC.
Under existing law, federal candidates and officeholders have long been able to establish federal leadership PACs that generally are used to support fellow candidates and party efforts. Contributions to a federal leadership PAC are limited to $5,000 per person, per calendar year; this amount does not count against the limit to the sponsor’s campaign committee. The new advisory opinion allows for the creation of a state-based equivalent.
The FEC’s advisory opinion concludes that Senator Cortez-Masto (D-NM) “may establish a nonfederal committee [an S-LPAC], which will exclusively raise and spend funds in connection with nonfederal [state and local] elections, and such funds would not be aggregated with contributions made by the same source to [Senator Cortez-Masto’s] federal leadership PAC under a shared contribution limit.”
The sponsor of a new S-LPAC “may solicit, receive, direct, transfer, or spend funds through” the S-LPAC, but the federal “hard money” contribution limits and prohibitions must be observed. In other words, the S-LPAC may only raise and spend funds that comply with the limits for a federal leadership PAC. Under FEC rules, an individual donor may contribute up to $5,000 per year to an S-LPAC, but the S-LPAC may not accept contributions from corporations, labor unions, federal government contractors, or foreign nationals. Please note, however, that any S-LPAC must also adhere to all applicable state contribution limits. If the state’s contribution limits are more restrictive than the federal limits, the lower, more restrictive, state limits must be observed.
While the FEC has now approved the creation of S-LPACs and specified what funds an S-LPAC may raise and spend, any S-LPAC will be a state political committee. An S-LPAC will not register with the FEC, and there are no FEC reporting requirements for an S-LPAC. Instead, an S-LPAC must register and file disclosure reports with a state campaign finance agency. The organizers of a new S-LPAC should also be aware that other state campaign finance laws also will apply to the S-LPAC, including disclaimer requirements and coordination restrictions that often differ from their federal equivalents.
Persons considering establishing an S-LPAC are advised to proceed with caution and consult with counsel. Organizers should be aware of additional, and potentially onerous, IRS filing obligations that may be incurred, as well as the impact of federal and state pay-to-play rules.
Please reach out to your Holtzman Vogel contact for more information on S-LPACs.