Revenue generated by the Hunley submarine project does not have to go to the state treasury, according to a legal opinion by state Attorney General Henry McMaster.

In a separate opinion, however, McMaster did say the Friends of the Hunley, a nonprofit group set up to oversee the conservation of the historic Confederate submarine, is a public agency. That means it must disclose how it spends money.

McMaster’s opinions were issued late last week in response to questions raised by the government watchdog group Common Cause and Hunley Commission chairman Glenn F. McConnell. McConnell, the Charleston Republican who also is the head of the state Senate, has defended the project amid questions about its spending.

“I think every reasonable person now should be satisfied,” said Richard Quinn, spokesman for the Friends of the Hunley. “It always seemed so obvious to us that everything was being done above-board and handled appropriately.”

The Friends of the Hunley has received $8 million in state and federal money. It had claimed in a court case that it did not have to disclose information to the public.

McMaster disputed that.

“We believe the law is clear,” McMaster wrote. “Any entity which receives or has received taxpayer funds — federal, state or local — is subject to the Freedom of Information Act. This would include the Friends of the Hunley.”

The Hunley project has become an issue in McConnell’s re-election race for the state Senate. His opponent, Charleston lawyer Justin Kahn, has said the Friends group, set up by the commission McConnell chairs, has spent thousands of dollars with little official oversight.

Common Cause also asked McMaster to look in the Friends’ spending. McMaster said — absent specific allegations — it was not appropriate for his office to look into that spending.

Kahn also has said revenue from the project should go to the state treasury.

One section of the agreement between the Hunley Commission and the federal government, which owns the sub, says that all Hunley revenue should go to the state of South Carolina. McConnell signed that agreement as head of the Hunley Commission.

But Quinn, whose marketing firm has done work for McConnell’s campaign, said the senator insisted on that language simply to make sure the federal government did not try to keep Hunley revenue.

In a lengthy opinion, McMaster agreed with McConnell that the Hunley Commission has broad authority.

“It is our opinion that the Hunley Commission possesses the power to create the nonprofit corporation known as the Friends of the Hunley to further its statutory duties to provide for the recovery, excavation and conservation of the Hunley,” he wrote.

Because the Hunley Commission has the power to create another organization to raise money to display the sub, McMaster also said that group, the Friends, can use Hunley revenue. The Friends group has raised at least $1.3 million through the Hunley.

“We believe a court would conclude that the revenue derived from the Hunley’s exhibition and display are not legally required by the programmatic agreement or any other provision of state law to be returned to the general fund of the state, but may remain with the nonprofit corporation for the operation of the project,” McMaster wrote.

Reach Washington at (803) 771-8385 or wwashington@thestate.com.