Federal Election Commission Main Page
August 6, 1993
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1993-9
Eric E. Doster
Foster, Swift, Collins & Smith, P.C.
313 South Washington Square
Lansing, MI 48933-2193
Dear Mr. Doster:
This responds to your letters dated June 15 and July 6,
1993, on behalf of the Michigan Republican State Committee
("the MRSC") concerning application of the Federal Election
Campaign Act of 1971, as amended ("the Act"), and Commission
regulations to the acceptance of corporate funds by a
building fund of the MRSC.
The MRSC is the State committee of the Michigan
Republican Party and is engaged in both Federal and
non-Federal election activity. The MRSC plans to undertake
one or all of the following activities:
(1) Establish a building fund to purchase or construct a
building to serve as new headquarters for its Federal
and non-Federal activities.
(2) Establish a building fund to pay off the balance of its
land contract on the building which presently serves as
headquarters for its Federal and non-Federal activities.
(3) In order to raise money for the building fund described
in #1 above, the MRSC may sell its land contract
interest (i.e., an equitable interest in the real
property covered by the contract) in its existing
headquarters and apply the proceeds to the building fund
established to purchase or construct a new headquarters.
You state that, as with any headquarters, the MRSC uses
the facility to influence Federal and non-Federal elections,
but creating the building funds is not done for the purpose
of influencing any elections. You state that "[i]n its
capacity as a committee registered with the Commission," MRSC
plans to take the following actions and observe the following
conditions: (1) it will solicit and accept corporate
contributions designated for the building fund(s); (2) it
will advise all potential corporate contributors that all
corporate contributions will be used for the building
fund(s); (3) it will establish a "separate segregated" bank
account in which only corporate contributions designated for
the building fund(s) will be deposited; (4) it will disburse
the corporate funds deposited in such separate account(s) to
either purchase or construct a new headquarters, or pay off
the balance of its land contract on its existing
headquarters; (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(s); and (7) it will not have to report the corporate
contributions to the building fund(s), other than on a
voluntary basis, to the Commission. Furthermore, the MRSC
plans to apply the funds only for construction or purchase of
an office facility and not to pay such ongoing costs as
property taxes and assessments. See Advisory Opinions 1991-5
and 1983-8.
In a letter sent by the Michigan Department of State to
you last July, the State asserted that Michigan law
prohibited the donation of corporate funds to be used to
purchase or construct a party headquarters. The letter
relied on an interpretive statement issued by the Michigan
Department of State in 1984 which cited Michigan Compiled
Laws §§169.254 and 169.255 and stated that an office used
even occasionally for campaign purposes, such as soliciting
support for a candidate or fundraising, "may not be purchased
or rented with funds commingled with corporate money."
You state that the MRSC's intended actions and
conditions are substantially identical to those set forth in
Advisory Opinion 1991-5 where the Commission approved the
establishment of a party building fund and stated that any
Tennessee State law prohibiting such a building fund under
those conditions would be preempted. You state that the only
"major difference" is that the MRSC may create a building
fund to pay off the balance of its land contract on its
existing headquarters facility. You wish to know whether, on
the terms and conditions described above, the MRSC may accept
corporate contributions either to pay off the balance of its
land contract on the existing building or to purchase or
construct a new headquarters facility. You also ask whether
Federal law preempts any Michigan law prohibitions on
corporate contributions to the building fund(s).1/
Under the Act and Commission regulations, a gift,
subscription, loan, advance, or deposit of money or anything
of value to a national or state committee of a political
party, which 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. §431(8)(B)(viii);
11 CFR 100.7(b)(12), 100.8(b)(13), and 114.1(a)(2)(ix).
Raising funds to pay off the land contract on the existing
building enables the party to complete its purchase of the
building and obtain legal title, and thus is a permissible
purpose for the exemption. In addition, raising funds for a
new headquarters by selling the MRSC's interest in the
existing headquarters is materially indistinguishable from
the receipt of donations for the new headquarters. 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, the MRSC may accept corporate
donations to the building fund as a part of any or all of the
three activities described in your request. See Advisory
Opinions 1991-5 and 1986-40.
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. 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.
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 this 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).2/ Advisory
Opinion 1991-5. The Commission concludes, therefore, that
the Act and Commission regulations preempt the application of
Michigan State law with respect to the prohibitions on
corporate donations to the MRSC building fund.
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 1991-5, 1986-40, and 1983-8)
ENDNOTES
1/ You state that your client is not seeking guidance as to
the reporting requirements for building funds under State or
local law, "since this issue has been squarely addressed by
the Commission." See Advisory Opinion 1991-5.
2/ 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).