PAC Operations in the Wake of COVID-19

As schools close, municipalities issue orders to shelter in place, and primary elections are postponed, it’s harder than ever to keep track of all the moving pieces. Those responsible for a federal PAC may have questions about how all of this impacts it, or maybe it’s been the last thing on your mind. There are a number of actions you can take now to maintain PAC operations, so you can focus on the important health and safety issues presented by this pandemic. Here are our tips and suggestions.

1: REPORTING: FEC reports are still due but the agency has suggested that it may show flexibility on penalties for late-filed reports. As the FEC’s COVID-19 Notice indicates: 

• The FEC does not have statutory authority to extend filing deadlines, but it may choose not to pursue administrative fines against filers prevented from filing by reasonably unforeseen circumstances beyond their control. See 11 CFR 111.35.

Our suggestion is to work diligently to file your reports on time, but if you cannot, file what you can, indicate “estimate” where appropriate, and amend as soon as possible.  Also, internally document the circumstances causing the delay. As the above Notice indicates, we expect the FEC to show flexibility, but it is better to have contemporaneous records – such as emails requesting the information from contributors – than having to re-create a timeline after the fact.

2: RECEIPTS: PAC checks must still be deposited within ten days of “receipt,” but the “date of receipt” may vary depending on how you receive the contribution. For example, what happens if your company physically shuts down or employees are subject to a shelter-in-place order?  In this case, the FEC’s definition of “receipt” likely provides cover because “date of receipt” is defined in the regulations as “the date such person obtains possession of the contribution.”  11 C.F.R. 102.8(b)(2).  If your office is closed, there is a high likelihood that the FEC would take the view your PAC did not have possession of the check until a PAC official could physically access the mail. 

Again, keeping contemporaneous records for this,  such as a time stamp on the envelope showing the date you accessed the mail — will make it easier to establish that your PAC complied with the 10-day rule if the FEC ever audits your PAC.  And, if possible, do all banking using e-banking or mobile banking apps.

For payroll deductions, the FEC considers the date of receipt to be the day that the pay is disbursed to the employee, so the connected organization — like a corporation — has ten days to deposit the contribution in its PAC (i.e., the SSF or separate segregated fund).  With electronic deposits and online banking, physical disruption in banking operations should not present an issue.

3: REPORTING: Pay attention to new primary election dates. To date, at least 5 states have delayed their primary elections, and other jurisdictions have made adjustments too.  The five states are Maryland, Kentucky, Ohio, Louisiana, and Georgia.  These changes affect the following:

• Whether a contribution to a candidate is a primary or general contribution. By default, undesignated contributions count towards the next election, which may now be the delayed primary in these states.  Our recommendation: always designate the election in the memo entry of your PAC check.
• If you are a Quarterly FEC filer, whether and when you need to file a Pre-Primary Report. Our recommendationis to file on a monthly schedule to avoid the need for Pre-Primary reporting.
• If you are disseminating public communications, you now have a new 30-day Electioneering Communication window in which to file an FEC Form 9.

4: AUDIT: DONOR MAINTAINENCE: Your company and its PAC may still communicate and solicit the restricted class. Although in-person fundraisers may be limited due to “shelter-in-place” orders or Center for Disease Control (“CDC”) recommendations to limit gatherings to less than 10 individuals, that doesn’t mean all communication must stop. Obviously, these uncertain times might cause you to consider pausing or changing your PAC solicitations. If your company does not already provide a charitable match to PAC contributions, consider instituting one now.  Your company could match every dollar of PAC contributions with a dollar or two to COVID-19 charitable relief efforts – that way, your restricted class can continue to donate while knowing they are also helping a charitable cause.

5: RESET: Use this opportunity to “reset” your PAC operations. The disruption of normal workflows, however unwelcome, also provides an opportunity to examine which processes are working and which are not. In addition to building in PAC processes to accommodate things like extended telework, you may also want to take the opportunity to ensure your PAC operations are FEC-compliant and following best practices.  It is prudent to plan to audit the PAC’s activities following the COVID-19 disruption to ensure compliance with FEC rules and to self-correct in a timely fashion.

If you have any questions about these issues or need help developing your political and governmental affairs operations, please contact either Fred Dombo at fdombo@nossaman.com or Bill Powers at wpowers@nossaman.com.