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FEC Record : Advisory Opinions

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AO 2011-21 Leadership PAC May Not Raise and Spend Unlimited Funds

A PAC that is sponsored by a federal officeholder (aka a leadership PAC) may not receive unlimited funds from individuals or any funds from corporations and labor organizations for the purpose of financing independent expenditures.         

Background
Constitutional Conservatives Fund PAC (the Committee) is a leadership PAC sponsored by and established, financed, maintained or controlled by Senator Michael Lee of Utah. It is affiliated with Lead Encourage Elect PAC (known as “LEE PAC”), another leadership PAC sponsored by Senator Lee.

The Committee maintains a single federal campaign account (current account), into which it receives contributions that are subject to the limitations, prohibitions and reporting requirements of the Federal Election Campaign Act (the Act). The Committee asked the Commission if it could establish a separate federal account (separate account), into which it would receive unlimited contributions from individuals, corporations and labor organizations. It would use the current account for making direct contributions to candidates, and the separate account to finance independent expenditures.

Independent expenditures financed from the Committee’s proposed separate account would expressly advocate for the election or defeat of federal candidates other than Senator Lee. These expenditures would not be coordinated communications, as defined at 11 CFR 109.21, and candidates that benefited from these independent expenditures would not be involved in fundraising for the Committee’s separate account.

Analysis
The Act provides that federal candidates and officeholders, their agents and entities directly or indirectly established, financed, maintained or controlled by, or acting on their behalf (collectively “covered persons”), may not solicit, receive, direct, transfer or spend funds in connection with an election for federal office unless those funds are subject to the limitations, prohibitions and reporting requirements of the Act. 2 U.S.C. §441i(e)(1)(A); 11 CFR 300.61.

By definition, leadership PACs are “directly or indirectly established, financed, maintained, or controlled” by a candidate for federal office or a federal officeholder. 11 CFR 100.5(e)(6). Therefore, funds received by such committees must be subject to the limitations, prohibitions and reporting requirements of the Act. Recent court cases such as Citizen’s United v. FEC (holding that corporations may make independent expenditures and electioneering communications with general treasury funds, but also reaffirming that contribution limits are an accepted means to prevent quid pro quo corruption and its appearance) and EMILY’s List v. FEC (holding that political committees and other non-profit groups may finance certain independent political activity with funds outside the limitations and certain prohibitions of the Act) do not invalidate these restrictions on covered persons. Section 441i(e) of the Act still governs the activity of covered persons when they solicit, receive, direct, transfer or spend funds in connection with an election for federal office.

It follows that the Committee may not receive unlimited funds from individuals, or any funds from corporations or labor organizations, because such funds would not be subject to the limitations and prohibitions of the Act.  See Advisory Opinion 2011-12 (Majority PAC and House Majority PAC.

This conclusion is not altered by the fact that the Committee would use the funds solely to finance independent expenditures supporting or opposing federal candidates and officeholders other than Senator Lee. Nor does it matter that the funds would be deposited into a separate federal account.

Date Issued: December 1, 2011; Length: 5 pages.

(Posted December 13, 2011; By: Isaac Baker)

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The FEC Record is produced by the Information Division, Office of Communications. Toll free 800-424-9530; Local 202-694-1100; E-mail info@fec.gov. Greg Scott, Director; Amy Kort, Asst. Director; Dorothy Yeager, Editor