Federal Election Commission Main Page
July 22, 1993
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1993-8
James H. London
London & Amburn, P.C.
1716 Clinch Avenue
Knoxville, TN 37916
Dear Mr. London:
This responds to your letter dated June 3, 1993, as
supplemented by your letters dated June 11 and June 18, 1993,
requesting an advisory opinion on behalf of Congressman John
J. Duncan, Jr. concerning application of the Federal Election
Campaign Act of 1971, as amended ("the Act"), to
contributions and expenditures by an incorporated principal
campaign committee.
Mr. Duncan is a Congressman representing the Second
District of Tennessee. Presently, Mr. Duncan's campaign
funds are held in the account of his principal campaign
committee, Duncan for Congress. Mr. Duncan would like to
incorporate his re-election campaign, under the Tennessee
Nonprofit Corporation Act, for liability purposes under 11
CFR 114.12(a). Therefore, he would like to transfer the
funds remaining in his present committee to a new,
incorporated principal campaign committee named Duncan for
Congress, Inc.1/
You state that, in accordance with 11 CFR 113.2, excess
campaign funds are used to make contributions to the
Republican Party on the national, state and local levels.
Congressman Duncan intends that the incorporated committee
continue to make contributions. In an average year, you
anticipate that the committee would make contributions
totaling in the range of $5,000 to $10,000. You anticipate
that approximately half of the contributions will be made to
political parties and approximately half will be made to
political candidates, "with a large part of these
contributions going to the Knox County Republican ticket."2/
You note that Commission regulations permit a political
committee to incorporate, and not be treated as a corporation
subject to the provisions of 11 CFR Part 114, if it
incorporates for liability purposes only. 11 CFR 114.12(a).
Tennessee law, however, differs with respect to incorporated
committees. Under the Tennessee Code, the funds of any
corporation doing business within the State may not be used
"for the purpose of aiding either in the election or defeat
in any primary or final election, of any candidate for
office, national, state, county, or municipal, or in any way
contributing to the campaign fund of any political party, for
any purpose whatever." Tennessee Code Annotated
§2-19-132(a). This prohibition does not apply "to a
contribution made by a national committee of a political
party as defined in 2 U.S.C. §431(14) [defining national
committee] and (16) [defining political party], which has
incorporated in accordance with 11 CFR 114.12(a), when such
committee contributes to a state political party executive
committee, ... if the funds contributed do not contain any
corporate contributions to the national committee of the
political party." T.C.A. §2-19-132(b). The Tennessee Code
does not go beyond this to permit other incorporated
committees to make contributions or expenditures.
In view of the Tennessee law, you ask whether the
incorporated committee may contribute excess campaign funds
to the Republican party and candidates. You also ask whether
the estimated amounts of these contributions raise any
specific problems.
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. §453. 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 the 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, but does not
affect state laws as to the manner of qualifying as a
candidate, or the dates and places of elections. 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
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, at 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 No.
95-44, at 51.
As part of its occupation of the area of contributions
and expenditures regarding Federal candidates and committees,
the Act and Commission regulations provide that excess
campaign funds may be used for several specific purposes,
including defrayal of any ordinary and necessary expenses in
connection with the recipient's duties as a Federal
officeholder, contributions to any organization described in
26 U.S.C. §170(c), transfers without limitation to any
national, State, or local committee of any political party,
or for any other lawful purpose. 11 CFR 113.2; see 2 U.S.C.
§439a. "Excess campaign funds" are defined as amounts
received by a candidate as contributions which he or she
determines are in excess of any amount necessary to defray
his or her campaign expenditures. 11 CFR 113.1(e). Assuming
Mr. Duncan determines that the amounts he wishes to have his
committee contribute are not needed to defray his campaign
expenditures, such funds would qualify as excess campaign
funds. See Advisory Opinion 1990-2 (where a Congressman who
intended to stay in office proposed to use his committee as a
guarantor of a $20,000 loan to a local party committee).
With respect to contributions of excess funds to
political party committees, the Act preempts the Tennessee
law. Section 439a and 11 CFR 113.2 specifically permit the
transfer of excess funds to party committees regardless of
whether such committees are political committees under the
Act or whether they engage in Federal activity. Thus, the
incorporated committee may donate to national, state, and
local party committees.
With respect to contributions of excess funds to Federal
candidates or their authorized campaign committees, the Act
preempts Tennessee State law. The incorporated committee may
make such contributions up to the limits of 2 U.S.C.
§441a(a)(1)(A). This results from the Federal law's sole
authority with respect to contributions and expenditures
regarding Federal candidates and committees. By this same
reasoning, however, the Act does not preempt Tennessee State
law with respect to contributions to non-Federal candidates.
Section 439a permits contributions to non-Federal candidates
if otherwise lawful. In the case of the incorporated
committee, however, contributions to non-Federal candidates
do not appear to be lawful under the Tennessee Code. See
Advisory Opinion 1986-5.
It should also be noted that Tennessee law appears to
speak broadly with respect to the activities of an
incorporated committee, prohibiting the use of funds for the
purpose of aiding in the election or defeat of a candidate.
This may be read as prohibiting the committee from making any
expenditures aiding in Mr. Duncan's election or the defeat of
his opponent. Under the broad preemptive powers of the Act
with respect to contributions and expenditures regarding
Federal candidates, such a prohibition is preempted.
In response to your follow-up question, the aggregate
yearly amounts referred to by you do not raise any specific
problems under the Act. With the exception of the latitude
provided by 2 U.S.C. §439a as to party committees, any
donation of excess funds to a particular political committee
should not exceed the limits set out in 2 U.S.C. §441a.
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. See 2 U.S.C. §437f.
Sincerely,
(signed)
Scott E. Thomas
Chairman
Enclosures (AOs 1990-2 and 1986-5)
ENDNOTES
1/ You have stated that the first committee will be
terminated upon the incorporation of the second committee.
The proposed transfer may occur pursuant to 11 CFR
110.3(c)(4) which permits transfers outside the limits of
2 U.S.C. §441a between a candidate's previous Federal
campaign committee and his or her current Federal committee.
Incorporation of the latter committee under 11 CFR 114.12(a)
does not prevent the application of this rule. In addition,
in view of the relationship of the two committees,
contributions to the first committee for an election, e.g.,
the 1994 primary or 1994 general, must be aggregated with
contributions to a new committee for the purposes of section
441a. The Duncan campaign also has the option of not
terminating the first committee, but incorporating it
instead, without forming a new committee.
2/ According to the most recent report filed by Duncan for
Congress, the 1992 Year End, the committee has $225,372 cash
on hand, and no debts are owed to or by it.