AO 2016-25: Federal officeholder may spend nonfederal funds for certain winding down expenses of previous nonfederal campaign

Vice President Mike Pence’s previous campaign committee for Indiana governor may spend its remaining nonfederal funds for several types of expenses related to winding down its state campaign activities and complying with Indiana disclosure laws. The committee may spend funds on activities, such as storage of committee assets and legal and accounting expenses associated with winding down the campaign’s operations, as long as such spending is consistent with state law.

Background

Vice President Mike Pence previously served as Governor of Indiana and was a candidate for re-election as governor until July 2016, at which time he became a nominee for Vice President. Upon his nomination for federal office, his state gubernatorial campaign (Mike Pence for Indiana) stopped raising funds, paid all expenses it had accrued up to that point, and applied a reasonable accounting method to determine how much of its remaining funds complied with federal amount limitations and source restrictions. Those federally permissible funds were then contributed to other committees or refunded to eligible donors. As a result, Pence for Indiana has remaining funds that are permissible under Indiana law, but none that comply with the limitations and prohibitions of federal law.

Mike Pence for Indiana wishes to use the remaining nonfederal funds in its account for such activities as storing nonfederal campaign assets that are owned by the committee such as files, file cabinets, desks, chairs, and a vehicle before they are eventually disposed of by the campaign. Also, the committee wishes to pay for legal and accounting expenses that are necessary to comply with Indiana campaign disclosure requirements and expenses that are associated with winding down the committee following the distribution of campaign assets.

Legal analysis

The Federal Election Campaign Act (the Act) prohibits any federal candidate or officeholder (or any entity directly or indirectly established, financed, maintained, or controlled by, or acting on behalf of, a federal candidate or officeholder) from raising or spending funds in connection with any nonfederal election unless those funds are subject to the limitations or prohibitions the Act. 52 U.S.C. § 30125(e)(1)(B); 11 CFR 300.62. A key exception to this provision, however, permits federal candidates or officeholders who are or were candidates for state or local office to raise and spend nonfederal funds in connection with their own campaigns, provided that such activities are permissible under state law, and refer only to candidates for that state or local office. 52 U.S.C. § 30125(e)(2); 11 CFR 300.63. These nonfederal funds may be from sources prohibited by the Act or in amounts that exceed the Act’s contribution limits.

In previous advisory opinions, the Commission has addressed proposed activities of nonfederal campaign committees that were established or maintained by federal officeholders, such as allowing nonfederal campaigns to raise funds to retire existing debts or to donate remaining funds to charitable organizations. See, for example, AOs 2007-01 (McCaskill) and 2007-26 (Schock).

In this case, the Commission concluded that the Act’s nonfederal funds restrictions apply to Mike Pence for Indiana because Vice President Pence is currently a federal officeholder and he established, financed, maintained, or controlled Mike Pence for Indiana. However, the Commission concluded that the exception for state campaign activity applies in this instance, as long as the spending is consistent with state law, because the proposed spending activities are solely in connection with Vice President Pence’s previous campaign for Governor of Indiana.

Issued January 25, 2017; 3 pages.

Resources:

• Advisory Opinion 2016-25 
  
• Commission consideration of AO 2016-25 [mp3]