Last Week At The FEC: Commission Confirms That Federal Funds Can Support State Candidates

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Last week the Federal Election Commission did not meet, but held a tally vote to approve Advisory Opinion 2014-03 regarding the use of campaign funds to pay for public communications in support of both a federal candidate and state candidates. The Commission also released two draft Advisory Opinions in response to Make Your Laws PAC’s request that it approve a framework within which political committees may accept contributions made in Bitcoins.

Federal Candidates May Use Campaign Funds to Support State Candidates

In AO 2014-03, the Commission voted without dissent to find that a federal candidate’s committee may use an unlimited amount of campaign funds to finance advertisements advocating the election of state and local candidates. In doing so, the Commission found that, provided the expenditures were made in compliance with state law, a federal candidate’s expenditures in support of state candidates are permissible so long as they are intended to further the federal candidate’s candidacy per 2 U.S.C. §439a(a)(1) and 11 C.F.R. § 113.2.

Prior to this opinion, the Commission had only explicitly found that federal candidates could use federal contributions to support ballot initiatives, not state and local candidates. See AO 2004-29. The Commission did not take any position on how state laws would effect such expenditures, or if state candidates would be required to report associated expenditures, leaving significant questions to be answered on a case-by-case basis before other candidates choose to make such expenditures.

Draft AOs Would Allow MYL PAC to Accept Bitcoin Contributions

The Commission released two draft AOs outlining how MYL PAC, and presumptively other federal political action committees, can go about accepting contributions of Bitcoins, the popular virtual currency. As this Blog discussed in February, the Commission has not previously provided an opinion on a committee’s acceptance of virtual currencies and deadlocked on a request from Conservative Action Fund last year, where it was ask whether a committee could lawfully accept Bitcoins as a form of contribution or distribute Bitcoins to pay for goods and services.

Both of the Commission’s two proposed draft AO’s would allow MYL PAC to accept Bitcoin contributions. Draft A would allow the Committee to accept Bitcoins as a normal in-kind contribution, and invest its own funds in Bitcoins to generate a return, but not use Bitcoins directly for purchases. Alternatively, Draft B would treat a Bitcoin contribution like cash, limiting the Committee to accept $100 worth of the currency and requiring that it be converted to US Dollars and deposited into the Committees bank account within 10 days of receipt. Although Bitcoin users would certainly prefer that the Commission adopt the former rather than the latter, either would represent a substantial step forward for the political legitimacy of virtual currencies.

Meeting Schedules

The Commission is scheduled to meet in executive session on Tuesday, April 22nd and in open session on Thursday, April 23rd. During its open session the Commission will consider the draft advisory opinions on Bitcoins discussed above, as well as two audit committee recommendations regarding the Nebraska Democratic Party and the State Democratic Executive Committee of Alabama.

Topics:  Advisory Opinions, Bitcoins, Campaign Funds, FEC, PACs, Political Candidates, Public Communications

Published In: Elections & Politics Updates, Finance & Banking Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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