FEC torn on limiting Sherrill’s, Gottheimer’s ability to put federal campaign money into gubernatorial super PACs

In January, Rep. Mikie Sherrill (D-Montclair) submitted a request for an advisory opinion from the Federal Election Commission (FEC) asking whether she – or other federal officeholders running for New Jersey governor like Rep. Josh Gottheimer (D-Tenafly) – could transfer unlimited funds from her congressional campaign account into a super PAC supporting her campaign for governor. The FEC seems to be of two minds about that question.

Sherrill received two draft opinions from the FEC: one of them reaffirms a pre-existing opinion from 2006 advising federal candidates that contributions from their federal accounts can only comprise 25% of an independent expenditure group’s receipts, while the other said that it did not have enough information to make a determination. Both draft opinions, however, assert that in general, contributing to a super PAC is an acceptable use of federal campaign funds.

In light of the conflicting opinions and the potential for a longer battle, Sherrill said she is withdrawing her request for an opinion.

“Based on the Commission’s two draft opinions, it is unfortunate but clear that there will not be unanimous agreement among the remaining commissioners on a final version,” states a letter from Jon Berkon and Jonathan Peterson, the counsel representing Sherrill and her leadership PAC, Gateway to Leadership. “Because additional time and resources are unlikely to change this reality, Representative Sherrill reluctantly withdraws the request.”

Sherrill’s quest for an advisory opinion could have, in theory, been in relation to her own campaign. Sherrill does have a supportive super PAC, One Giant Leap, working to boost her gubernatorial campaign, and her federal campaign account and leadership PAC have a combined $581,000 that she could be looking to transfer to that super PAC.

But it’s far more likely that Sherrill’s FEC request was intended to hamstring Gottheimer, her House colleague and gubernatorial opponent, who had a whopping $20.7 million in his congressional account at the end of 2024 – money that Gottheimer can’t transfer directly into his gubernatorial campaign under state campaign finance law, but that he could in theory funnel into allied expenditure groups.

A super PAC supporting Gottheimer’s campaign for governor, Affordable New Jersey, has spent $8 million so far on TV and streaming ads boosting his candidacy. Gottheimer has declined to say whether his congressional campaign is providing some or all of the group’s funding.

And there may be more pro-Gottheimer spending on the way. Another group, No Surrender, recently registered with the New Jersey Election Law Enforcement Commission (ELEC) with the same treasurer and vague mission statement as Affordable New Jersey (“the committee will support and oppose candidates for elected office across the state”), and its ELEC filing says it plans to spend $5 million this cycle. The group began airing pro-Gottheimer ads this week that are are identical to ads Affordable New Jersey has been running.

Under New Jersey law, gubernatorial candidates participating in the state’s public financing system are subject to strict limits on how much they can raise, both from individual donors and in total. But independent expenditure groups are subject to far fewer limitations, and there appears to be no prohibition in state law on those groups receiving their funding from federal campaign accounts.

But as Sherrill’s advisory opinion saga demonstrates, federal law on the issue is murkier. The Federal Election Campaign Act states that any entity “directly or indirectly established, financed, maintained, or controlled” by a federal candidate or officeholder is subject to the financial limitations imposed by the act, but how that should be interpreted is less certain.

The FEC’s 2006 opinion set a threshold: if an outside group derives at least 25% of its funding from a single candidate or officeholder over a 12-month period, then that constitutes being “established, financed, maintained, or controlled.” One of the FEC’s draft opinions in response to Sherrill’s request says that “given the similarities between the facts presented in this request and those considered in [the 2006 opinion], and in the absence of any facts here that would support a different result,” the 25% threshold remains in effect.

The other draft opinion, however, asks for more information and context – some of which Sherrill might not be able to provide. The opinion says that because Sherrill does not identify the independent group she intends to finance or its donation patterns, the FEC can’t issue a conclusive determination; Sherrill could of course name her own super PAC, but she’s barred from coordinating with it or knowing its inner workings, making some of those questions difficult to answer (not to mention the fact that she has no idea what’s happening inside Gottheimer’s allied PAC).

Both opinions do definitively state, though, that the 25% threshold notwithstanding, federal candidates are allowed to put money from their FEC accounts into groups supporting their state-level campaigns.

“[Sherrill] proposes to donate federal campaign funds to an organization for the expected benefit of her state campaign. She also hopes that the recipient committees will use the funds to assist other Democratic campaigns in New Jersey, by, for example, making contributions to state, county, and municipal organizations (including but not limited to party committees),” reads the draft opinion that affirms the 25% threshold. “Accordingly, the Commission concludes that the proposed transactions are a permissible use of the Campaign Committee’s funds, subject to any applicable provisions of New Jersey state law.”

It likely won’t be clear whether Sherrill – or, more important, Gottheimer – are using their federal money for gubernatorial ends until around April 15, when FEC reports for the 1st quarter of 2025 are due. While those reports won’t reflect any activity on the super PACs’ parts, they will show if either congressmember has sent vast sums of money to an outside group.

If that is in fact the case, the April filings could prompt an FEC complaint, starting the FEC process all over again. But because the super PACs themselves won’t have to file any reports with ELEC until late May, it may not be known whether the FEC’s 25% financing threshold has been reached until then, just a couple of weeks before the June 10 primary.

In a statement, Sherrill said that her campaign intends to abide by the 25% threshold – and that she hopes other candidates do, too.

“Mikie is determined to comply with both the spirit and letter of the FEC guidance, which is why she submitted the request and is disappointed that the FEC, politicized by Trump, is unable to agree on an opinion,” a Sherrill spokesperson said. “Our campaign believes the 2006 guidance still stands — as Draft A concludes — and would certainly expect that other candidates in New Jersey will comply with the guidance which outlines the low limit on contributions.”