Federal Election Commission Main Page
April 28, 1995
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1995-10
Margaret Person Currin
Currin Law Firm
333 Fayetteville Street Mall
Post Office Box 269
Raleigh, NC 27602-0269
Dear Ms. Currin:
This responds to your letters dated March 10 and
February 15, 1995, requesting an advisory opinion on behalf
of the Helms for Senate Committee ("the Committee")
concerning application of the Federal Election Campaign Act
of 1971, as amended ("the Act"), and Commission regulations
to a dispute over ownership of Committee records.
You state that on August 1, 1994 (all dates hereafter
are 1994, unless stated otherwise), a new treasurer was
appointed for the Committee by Senator Jesse Helms who is a
candidate for the 1996 Senate election cycle in North
Carolina. He has authorized the Committee as "his one and
only" principal campaign committee. The new treasurer is
J.C.D. ("Jack") Bailey who replaced the former treasurer,
Elisabeth Smith. Soon after his appointment, a dispute
developed between Mr. Bailey and the former treasurer
regarding certain information and Committee records, as well
as other Committee assets, which were apparently developed or
acquired before the tenure of Ms. Smith ended on August 1.
Counsel to the Committee (and its treasurer) engaged in
extensive negotiations with Counsel for the former treasurer
to resolve the dispute. The negotiations are reflected in at
least 11 items of correspondence during the period August 19
until February 3, 1995. At a date soon after December 13,
the Committee apparently obtained such "minimal records and
information" from the former treasurer, or other personnel,
as were required to file a year end report with the
Commission (covering all of the Committee's 1994 financial
activity) and to file future FEC reports.
You explain that the Committee believes "that this
matter [the dispute with the former treasurer] has raised no
question about the completeness and accuracy of the
Committee's 1994 year-end report or the Committee's ability
to file complete and accurate compliance reports in the
future." You further state:
Complete donor data is available to assure that all
contribution reports are in compliance with the FEC Act. The
bookkeeper was able to re-create the Committee's
disbursements from July 1-August 1, 1994 so that that portion
of the year-end report was complete. As a safeguard, the
1994 year-end report was amended in a timely manner after
obtaining and reviewing a copy of the partial report filed
for that one-month period by the former treasurer.
Even though, according to your explanation, sufficient
records and information have been made available to the
Committee to enable it to satisfy all the reporting
requirements of the Act, there are numerous other records and
related information that are still retained by the former
treasurer. You indicate that these records are subject to
the Commission rule at 11 CFR 102.9 which provides that
Committee records must be retained "for a minimum of three
years."
In a letter (dated January 23, 1995) from Committee
Counsel to the former treasurer's Counsel, the withheld
records are generally referred to as FEC "compliance data
which [the Committee] needs both in the short term and for
overall compliance." The letter asserts a "final request
that complete copies of all FEC compliance materials and all
records related to the 1996 election be provided to the new
treasurer forthwith." The letter lists the specific records
sought: all FEC reports, all reattribution/redesignation
letters, card file of refunds/reattributions/redesignations,
paid invoices, tax reports, bank statements, payroll records,
check books, batch control sheets, all other FEC compliance
materials relative to the 1996 campaign.
For his part, Counsel to the former treasurer has
asserted repeatedly that North Carolina law governs this
dispute and supports his position that the subject records
and information are the property of the former treasurer.
Counsel further contends that the current Committee is a new
and different committee from the "old committee" which
existed during the former treasurer's tenure, and that
Senator Helms cannot control the disposition of the "old
committee's" assets or records. Counsel has advised the
former treasurer that she should retain possession of the
"old committee's" records in order to comply with the Act and
be in a position to respond to any inquiry by the Commission.
Counsel has further represented that the former treasurer has
provided the "new" Committee with the information needed for
its 1994 year-end report and its future FEC reports. Lastly,
Counsel explains that the records still retained by the
former treasurer, which cover the pre-August 1 activity of
the Committee, as well as "the documents that support its FEC
reports are readily available to the FEC should they require
information." Letter dated February 3, 1995 from former
treasurer's Counsel to Committee Counsel.
In view of these circumstances you request an opinion on
two questions:
(1) Does the Act preempt North Carolina law concerning
the composition of the Committee and the duties and
liabilities of the Committee regarding its record keeping
responsibilities?
(2) Can the Committee remain in compliance with the Act
and Commission regulations if the records of the Committee
prior to August 1, 1994, remain in the sole possession of the
former treasurer?
In addition, if the former treasurer's retention of
Committee records for financial activity before August 1 does
not comply with the Act and Commission regulations, the
Committee requests assistance from the Commission "in
directing the former treasurer to turn over these records, or
copies thereof, to the Treasurer [Mr. Bailey] so that [the
Committee] can continue to comply with applicable FEC laws
and regulations."
Subject to the discussion below and for the reasons
stated therein, the Commission concludes as follows:
(1) The Act and Commission regulations recognize only
the Committee and its duly designated treasurer as having
legal title to and control over all Committee records that
are required to be created, obtained, and maintained under
the Act and Commission regulations.
(2) The Act and Commission regulations preempt and
supersede North Carolina law to the extent it would purport
to vest ownership rights or title to such records in any
person other than the Committee and its treasurer, but the
Act does not provide a statutory remedy to the Committee to
compel its former treasurer or any other person to deliver
such records to the Committee.
(3) The Committee and its current treasurer will be in
compliance with the recordkeeping requirements of the Act
with respect to records required to be created and maintained
before August 1, 1994, only if the Committee can establish
that it has taken best efforts to obtain those records.
(4) The Committee will not be in violation of the
recordkeeping requirements of the Act solely on account of
the former treasurer's failure to deliver the pre-August 1,
1994 records to the Committee's current treasurer. However,
the Committee's liability for any failure to file complete
and accurate reports, or for knowingly accepting any unlawful
contribution, would not be affected by its apparent lack of
control or full access to such records, and the Commission
will not regard the Committee's lack of control or access as
an affirmative defense to any such liability.
(5) Until such time as the Committee acquires the
records in question from its former treasurer, it must
identify her on its Statement of Organization as a custodian
of its records (i.e. books and accounts) which cover the
period ending August 1, 1994.
The Act and Commission regulations delineate in
considerable detail the accounts and related records that
must be created and maintained by a political committee, its
treasurer and other committee agents. 2 U.S.C. 432(c),
11 CFR 102.9. In several respects, the requirements of these
provisions directly impose obligations on the treasurer.1
The regulations also impose other record keeping and
record retention obligations on political committees. 11 CFR
104.14(b). These include the duty to keep a variety of bank
records pertaining to information required to be reported;
vouchers, worksheets and other documents which must provide
in sufficient detail the necessary information and data from
which reports filed by the political committee may be
verified, explained, clarified, and checked for accuracy and
completeness. 11 CFR 104.14(b)(1). There is a minimum three
year preservation and retention requirement for all such
records and documents which runs from the filing date of the
report wherein the record-related transaction is disclosed.
11 CFR 102.9(c), 104.14(b)(3).
Treasurers and their agents are required to perform each
of the foregoing duties, as well as those set forth in
section 102.9 and other provisions of Commission regulations.
See, for example, 11 CFR 103.3 [treasurer must examine all
contributions received for evidence of illegality as to
donors and to comply with contribution limits]; 11 CFR
104.1(a) and 104.14(a) [treasurer must file and sign periodic
financial activity reports for political committee].
The Act and Commission regulations impose the foregoing
duties and obligations upon every political committee, and
the committee's treasurer has the primary and personal duty
to perform them.2 Furthermore, at least one Federal district
court decision has held that a treasurer had personal
liability for the payment of civil penalties imposed on a
defunct political committee for its violations of the Act.
Federal Election Commission v. Dramesi for Congress
Committee, No. 85-4039 (MHC) (D.N.J. Sept. 5, 1990)
(unpublished opinion) [treasurer's liability distinct from
liability of committee for FECA violations, and since
Congress chose to hold an individual, the treasurer,
responsible for compliance with FECA it follows that "an
individual will also stand responsible for his indiscretions
as a treasurer."] This personal liability will not be abated
or avoided in circumstances where a violation may result
entirely or partially from the fact that the required
committee records were not held by or under the control of
the treasurer.3
With respect to the preemption of North Carolina law in
this situation, the Commission concludes that the Act and
Commission regulations would supersede and preempt state law
pertaining to the Committee's obligations to organize itself
in the manner specified in the Act, to keep records, and to
file reports relying on the information maintained in its
records. Furthermore, North Carolina law would also be
superseded and preempted with respect to the determination of
who has title to and ownership of Committee records that are
required to be maintained under the Act and Commission
regulations.
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 . . .
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) [emphasis added]. 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. 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 (1977).
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, at 51.
The Act governs the conduct of campaigns for Federal
office and prescribes the organizational and disclosure
requirements applicable to political committees.4 The noted
organizational requirements, along with the related
recordkeeping and reporting rules described above, represent
the legal framework in which the Committee must conduct its
operations. North Carolina law may not encroach upon
Committee operations or the duties of the Committee's
treasurer or other agents as to these matters because they go
to the essence of the oversight duties and responsibilities
placed upon the treasurer of a political committee. Since
the treasurer has potential liability for violations of the
Act which may stem from lack of access to or control over
political committee records, it follows that the Act gives
the Committee a right of control and ownership of the
records.5
This result does not alter the Commission view that in
many respects the financial transactions and other operations
of a political committee are subject to and governed by state
law. For example, the Commission has long held and recently
reaffirmed that personal liability of a Federal candidate on
a bank loan, or other debt incurred for campaign purposes, is
governed by state law and not by the Act. Advisory Opinion
1995-7, citing Advisory Opinion 1989-2. Similarly, the
Commission has held more generally that the determination of
liability for any debt or contract of a political committee
is governed by state law and not the Act. See Advisory
Opinions 1984-58, 1981-42 and 1975-102; see also Advisory
Opinion 1988-44 [running of state statute of limitations on
debt owed by committee does not extinguish debt under state
law and Commission relies on that result for purposes of the
Act's debt reporting rules]. To the same effect is the
recent decision of the (Fifth Circuit) United States Court of
Appeals in Karl Rove & Company v. Thornburgh, 39 F.3d 1273,
1280 (5th Cir. 1994) [State law controls as to liability of
former Federal candidate on contract of his authorized
committee, and Act would not preempt application of state law
on that issue].6
The situation presented here, however, does not involve
a contract or debt of the Committee, or the personal
liability of its authorizing candidate for a campaign loan.
Instead, it raises the legal issue of the possible
application of State law in a manner that may impair the
ability of the Committee treasurer to perform his obligations
under the Act and Commission regulations. As noted above,
the treasurer's duties and the proper performance of those
duties are central to a political committee's compliance with
the Act and Commission regulations. Those duties arise
irrespective of whether the committee has unpaid creditors or
outstanding bank loans. Accordingly, the Commission has
concluded that the Act and Commission regulations would
preempt and supersede the application of North Carolina law
on the issue of who has title or ownership rights in the
Committee records at issue here.
At the same time, the Commission emphasizes that
irrespective of whether the Committee prevails in its further
efforts to obtain the records held by the former treasurer,
the Committee's obligations (and those of its current
treasurer) to comply with all the disclosure requirements,
contribution limits and prohibitions, and all other
provisions of the Act and Commission regulations, remain
unaffected by the dispute. In short, the Committee and its
treasurer are in the same position regarding those
obligations as would be the case if there was no dispute.
This means, for example, that the treasurer is personally
responsible for the timely filing of complete and accurate
reports. 11 CFR 104.14(d). He is also subject to liability
if he "knowingly accept[s] a contribution made for the
benefit or use of a candidate . . . in violation of any
limitation" in section 441a(a). 2 U.S.C. 441a(f).
The Committee believes with good reason that it needs
the pre-August 1 records to perform its duties to keep
records and otherwise comply with the Act. The Commission
notes that the Committee may need to demonstrate that it has
taken "best efforts" to acquire the required information.
2 U.S.C. 432(i), 11 CFR 102.9(d). This showing must be made
in the event the Committee claims at some future time that
the former treasurer's retention of the records prevented the
Committee's compliance with the Act. In the meantime, the
Committee should amend its Statement of Organization (FEC
Form 1) if the former treasurer remains the custodian of
Committee records predating August 1. 2 U.S.C. 433(b)(3),
433(c). The Committee may note, if desired, that the records
remain with the former treasurer notwithstanding the protest
of the Committee. Nothing in this advisory opinion shall
prevent the former treasurer from retaining copies of
Committee records, created and maintained during her term, if
the former treasurer returns the records to the Committee.
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
Danny L. McDonald
Chairman
Enclosures (AOs 1995-7, 1989-27, 1989-2, 1988-44, 1984-58,
1981-42, and 1975-102)
_______________________________
1 For example, the treasurer is
required to keep: an account of all
contributions received by the
committee; the name and address of
each person who contributes over $50
to the committee along with date and
amount of each such contribution; the
name, address, date, amount, and
additional donor identification data
for contributions from any person
that exceed a total of $200 during
the same calendar year; the full
identification of each political
committee that makes any contribution
along with its date and amount; the
name and address of every person who
receives a disbursement from the
committee along with the date,
purpose and amount thereof, with
additional documents (receipt,
invoice, or canceled check) for
disbursements exceeding $200. 2
U.S.C. 432(c); 11 CFR 102.9(a) and
102.9(b).
2 The Rove opinion also considered
the issue of membership in the
principal campaign committee
authorized by the Federal candidate.
It concluded that the state common
law of unincorporated associations
would apply and that membership in
such a committee was a question of
fact governed by the intent of both
parties--the putative member and the
association. The Act and Commission
regulations are silent as to the
membership of a principal campaign
committee (or other
candidate-authorized committee).
Whether or not a principal campaign
committee has members or a membership
policy, the committee clearly remains
an ongoing organization because the
Act requires that it continuously
file reports until the proper filing
of its termination report which is
subject to Commission review and
approval. 2 U.S.C. 433(d)(1), 11
CFR 102.3(a) and (b). The facts in
this opinion indicate that the
Committee is active. It is accepting
contributions and making
expenditures, and it has never sought
to terminate either before or after
August 1. Therefore, the position of
the former treasurer, that a "new
committee" was established after
August 1, is not a valid
interpretation of the Act or
Commission regulations.
11 CFR 102.9 and 102.9(d)
[treasurer and authorized agents
shall fulfill all recordkeeping
duties and must use best efforts to
do so]; 11 CFR 104.14(d) [treasurer
personally responsible for complete,
accurate and timely filing of reports
and other required statements].
See 11 CFR 103.3(b) [treasurer
responsible for reviewing all
contributions to determine if they
are in excess of contribution limits
when aggregated with other
contributions from same donor] and 11
CFR 102.9(f) [treasurer's failure to
maintain documentation concerning
designations, redesigna-
tions, reattributions and dates of
contributions will nullify any
attempted revisions regarding
election to which contribution
attributed for purposes of
contribution limits].
Among the requirements are: the
committee must be authorized in
writing by the candidate on whose
behalf it functions and must include
the candidate's name in the committee
name, it must always have a treasurer
in order to accept contributions or
make expenditures, it must have a
custodian of its books and accounts,
and it must maintain at least one
bank (or qualified credit union)
depository account. 2 U.S.C.
432(a), 432(e), 432(h) and
433(b)(3). The identification of
these personnel and the committee's
bank account information shall be
disclosed when the committee
registers with the Commission and
thereafter whenever there are changes
in personnel, bank accounts or other
necessary data. 2 U.S.C. 433(a),
(b), and (c).
See Advisory Opinion 1989-27
[Massachusetts statute could restrict
personal campaign activity of State
employee, who was Federal candidate,
but was superseded and preempted by
the Act to extent it restricted
principal campaign committee of such
candidate from accepting or
soliciting contributions through the
efforts of other personnel acting for
the committee.]