Federal Election Commission Main Page
May 3, 1991
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1991-5
Todd Campbell
Gullett, Sanford, Robinson & Martin
230 Fourth Avenue, North
Third Floor
P.O. Box 2757
Nashville, TN 37219-0757
Dear Mr. Campbell:
This responds to your letter dated February 19, 1991, requesting
an advisory opinion on behalf of the Tennessee Democratic Party
("TDP") concerning application of the Federal Election Campaign Act of
1971, as amended ("the Act"), and Commission regulations to the
acceptance and reporting of corporate funds by a TDP building fund.
TDP is a political party engaged in both Federal and non-federal
election activity. In addition to having a committee registered with
the Commission, TDP has various non-federal committees registered with
the Tennessee Registry of Election Finance ("the Tennessee Registry"),
and county election commissions in Tennessee. TDP maintains separate
bank accounts for its Federal and non-federal activity.
TDP intends to raise funds to purchase a building to serve as
headquarters for its Federal and non-federal activity. Based on the
exception in the Act and regulations to the definition of
"contribution" for donations to defray costs of construction or
purchase of a party office facility under certain conditions, TDP
intends to accept corporate contributions to the building fund. You
state that, "in its capacity as a committee registered with the
[Commission]," TDP plans to take the following actions and observe the
following conditions: (1) it will solicit and accept corporate
contributions designated for the building fund; (2) it will advise all
potential corporate contributors that all corporate contributions will
be used exclusively for the building fund; (3) it will establish a
"separate segregated" bank account in which only corporate
contributions designated for the building fund will be deposited; (4)
it will disburse the corporate funds deposited in that separate
account only to purchase or construct a headquarters, or refund
contributions if a facility is not acquired; (5) it will not use any
corporate funds received for the purpose of influencing particular
Federal, State, or local elections, or transfer such corporate funds
to a bank account used to influence particular Federal, State, or
local elections; (6) it will not have to limit, other than on a
voluntary basis, the amount of the corporate contributions,
individually or collectively, to the building fund; and (7) it will
not have to report the corporate contributions to the building fund,
other than on a voluntary basis, to the Commission, to the Tennessee
Registry, or to county commissions.
You inform us that Tennessee election law prohibits corporate
contributions to political parties in certain circumstances, and that
it requires the reporting of certain contributions and expenditures
used in State and local elections to the Tennessee Registry and to
county election commissions. T.C.A. Sc2-19-132; Sc2-10-101 et seq.
You ask whether TDP may accept corporate contributions to purchase
or construct a headquarters facility on the terms and conditions
described above. You also ask whether Federal law preempts Tennessee
prohibitions and reporting requirements pertaining to corporate
contributions to the building fund.
Under the Act and Commission regulations, a donation to a national
or state committee of a political party that is specifically
designated to defray the costs incurred for construction or purchase
of an office facility is not considered to be a contribution or
expenditure provided that the facility is not acquired for the purpose
of influencing the election of any candidate in any particular
election for Federal office. 2 U.S.C. Sc431(8)(B)(viii); 11 CFR
100.7(b)(12), 100.8(b)(13), and 114.1(a)(2)(ix). Under the conditions
set out, conditions indicating specific designation by the
contributors for the fund and indicating that the funds will not be
used for the purpose of influencing a Federal election, TDP may accept
corporate donations to the building fund.1/ See Advisory Opinion
1986-40.
The regulations also provide that the amount of such a donation
made to a committee which is not a political committee under 11 CFR
100.5 need not be reported. If such donation is made to a political
committee, it shall be reported in accordance with 11 CFR 104.3(g), as
a memo entry on Schedule A. 11 CFR 100.7(b)(12) and 100.8(b)(13).
See 11 CFR 114.1(a)(2)(ix).
The donations to be solicited by TDP will not meet any of the
conditions for deposit in a Federal account, i.e., an account making
expenditures for the purpose of influencing Federal elections. Such
donations will not be designated for the Federal account, will not
result from a solicitation which expressly states that the
contributions will be used in connection with a Federal election, and
will not be from contributors who are informed that their donations
are subject to the limitations and prohibitions of the Act. 11 CFR
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1/ The Commission notes that the building fund exception
extends only to donations to defray costs incurred for
construction or purchase of an office facility and does not
extend to donations to pay such ongoing operating costs as
property taxes and assessments. See Advisory Opinion 1983-8.
102.5(a)(2).2/ Therefore, any donations received for the building fund
would have to be deposited in an account separate from any Federal
account maintained by TDP, as you have indicated will be done with the
corporate donations. Since the separate account for building funds
will not be a political committee under 11 CFR 100.5(g), the donations
need not be reported to the Federal Election Commission. Advisory
Opinion 1986-40.3/
You indicate that Tennessee State law may prohibit the making of
corporate donations for the construction or purchase of a party office
facility or corporate donations to a fund set up for such a purpose.
You also indicate that Tennessee law may require the reporting of
these donations and disbursements. You ask whether the Act would
preempt the application of State law to the use and reporting of funds
for the stated purpose.
The Act states that its provisions and the rules prescribed
thereunder, "supersede and preempt any provision of State law with
respect to election to Federal office." 2 U.S.C. Sc453. The House
committee that drafted this provision intended "to make certain that
the Federal law is construed to occupy the field with respect to
elections to Federal office and that Federal law will be the sole
authority under which such elections will be regulated." H.R. Rep.
No. 93-1239, 93d Cong., 2d Sess. 10 (1974). According to the
Conference Committee report on the 1974 Amendments to the Act,
"Federal law occupies the field with respect to criminal sanctions
relating to limitations on campaign expenditures, the sources of
campaign funds used in Federal races, the conduct of Federal
campaigns, and similar offenses but does not affect the States'
rights" as to other areas such as voter fraud and ballot theft. H.R.
Rep. No. 93-1438, 93d Cong., 2d Sess. 69 (1974). The Conference
report also states that Federal law occupies the field with respect to
reporting and disclosure of political contributions to and
expenditures by Federal candidates and political committees. Id. at
100-101.
When the Commission promulgated regulations at 11 CFR 108.7 on the
effect of the Act on state law, it stated that the regulations follow
section 453 and that, specifically, Federal law supersedes state law
with respect to the organization and registration of political
committees supporting Federal candidates, disclosure of receipts and
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2/ The regulations provide exceptions to these restrictions
in some specific circumstances not relevant here, e.g., the
allocation of certain expenses for mixed Federal and
non-federal activities. See 11 CFR 106.5(g) and 106.6(e).
3/ The Commission notes that its recently amended regulations
regarding allocation of expenditures by national party
committees specifically require that these committees report
the receipts and disbursements of their building fund
account(s). 11 CFR 104.8(f) and 104.9(d). There is no
similar provision applicable to state party committees.
expenditures by Federal candidates and political committees, and the
limitations on contributions and expenditures regarding Federal
candidates and political committees. Federal Election Commission
Regulations, Explanation and Justification, House Document No. 95-44,
p. 51. 11 CFR 108.7(b). The regulations provide that the Act does
not supersede state laws concerning the manner of qualification as a
candidate or political party organization, dates and places of
elections, voter registration, voting fraud and similar offenses, or
candidates' personal financial disclosure. 11 CFR 108.7(c). The
Commission explained that "[t]hese types of electoral matters are
interests of the states and are not covered in the act." House
Document 95-44, p. 51.
The Act and Commission regulations specifically address building
fund donations and clearly permit them. In addressing such donations
and the entities receiving them, i.e., political committees or
organizations specifically not attaining such status, the Act speaks
to subject matter involving the organization of political committees,
limitations and prohibitions under the Act, and the disclosure of
receipts and expenditures. Congress explicitly decided not to place
restrictions upon a subject, the cost of construction and purchase of
an office facility by a national or state political party committee,
which it might otherwise have chosen to treat as election influencing
activity. Because such a facility would be used, at least in part,
for Federal election activity, Congress could have decided that the
purchase or construction of such facility was for the purpose of
influencing a Federal election. Instead, it took the affirmative step
of deleting the receipt and disbursement of funds for such activity
from the specific proscriptions of the Act. In addition, there is no
indication that Congress envisioned any sort of limitation on its
preemption to some allocable portion of the costs of purchasing or
constructing a building. See Report of the Committee on House
Administration, Federal Election Campaign Act Amendments of 1979, H.R.
Rep. No. 96-422, 96th Cong., 1st Sess. 8-10 (1979) (specifically
sanctioning allocation of expenses for certain exempt party
activities).4/ The Commission concludes, therefore, that the Act and
Commission regulations preempt the application of Tennessee State or
local law with respect to the prohibitions on corporate donations to
the TDP building fund.
The Commission concludes that any reporting responsibility imposed
by the State of Tennessee regarding building fund receipts and
disbursements of the TDP would not be preempted. The Commission has
construed the Act and congressional intent as requiring disclosure at
the Federal level of building fund activity of the national party
committees only. See 11 CFR 104.8(f) and 104.9(d). A state level
disclosure requirement regarding a state party building fund would not
encroach upon a regulatory area occupied by the Act. Further, there
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4/ The Commission has carried forward the expression of
Congressional intent to allocate certain party activities.
See 11 CFR 100.7(b)(9), (b)(15)(ii), and (b)(17)(ii), and
100.8(b)(10), (16)(ii), and (18)(ii).
is no indication that Congress intended to preempt the disclosure
authority of states with regard to state party building fund activity.
This response constitutes an advisory opinion concerning
application of the Act, or regulations prescribed by the Commission,
to the specific transaction or activity set forth in your request.
Sincerely,
(signed)
John Warren McGarry
Chairman for the
Federal Election Commission
Enclosures (AOs 1986-40 and 1983-8)