                                                December     31,       1973


The Honorable   A. R. Schwartz                                     c    Opinion    No.   H-    189
Chairman
Jurisprudence   Committee                                               Re:     Construction    of “political
Texas State Senate                                                              committee”     as used in
Austin,   Texas                                                                 H. B. 4, 63rd Leg.,        The
                                                                                Campaign     Reporting    and
Dear      Senator      Schwartz:                                                Disclosure    Act of 1973

      The 63rd Legislature    adopted the Campaign Reporting                              and Disclosure
Act of 1973 (Acts 1973, 63rd Leg, ch. 423, p. 1101) amending                               various articles
of Chapter Fourteen   of the Texas Election  Code.

          One of the principal           changes     was    to make       many    provisions     of the
Chapter,    theretofore            applicable     only   to candidates,         now applicable       to “political
committees.     ”

       Article  14.01 of the Code, as amended,       defines apolitical   committee   as
“any group of persons formed      to collect  contributions   or make expenditures
in support for or in opposition    to a candidate   or measure     to be on a ballot in
a public election.  ”

          Your      letter,   written    on behalf       of the Senate        Jurisprudence      Committee,
states:

                    “Various     corporations,    employee     groups and professional
                    associations     have in the past formed        political   action arms
                    separate    and distinct from their basic organizations.                In
                    some instances       these political    action committesshave          been
                    established     to advance specific      purposes     common to all of
                    their members,        while in other cases the PAC was formed
                    simply to encourage        greater   participation      in the political
                    process    by its membership.         In every instance       these




                                                    p. 880
The Honorable   A.R.   Schwartz,     page   2   W-189)




            political  action groups are continuing        organizations
            which generally     support multiple      candidates    in any
            given elections    and sometimes      support multiple
            candidates    in the same race.      Some of the PACs
            were in existence     long before    the passage     of House
            Bill No. 4 in 1973, the Texas Campaign            Reporting
            and Disclosure     Act of 1973; others were formed
            shortly   before the passage of the act and still others
            may be formed in the future.         None of these political
            action committees      were formed      for the purpose of
            supporting    or defeating   any particular     candidate    or
            measure,     and in most instances       the committee     was
            formed    prior to the time any person had become
            a candidate    as that term’is   defined in the 1973 Act.

            “I am attaching        a copy of the letter I sent as chairman
            of the Senate Jurisprudence           Committee     to members     of
            the committee,         explaining   briefly  why the Act fails to
            indicate     clearty    whether political    action committees
            are included within the scope of the definition             of a
            ‘political     committee.     ’ In addition,    the letter to the
            committee        indicates   that if PACs are included within
            the definition      of a political   committee,     such inclusion
            raises     still further questions      which ought to be answered.

            “Therefore,  I ask you on behalf of the Senate Jurispru-
            dence Committee   to consider  the following questions:

                   “1. Is a political   action committee     such as
            described   above a ‘political    committee’  for the purposes
            of the Texas Campaign       Reporting   and Disclosure   Act of
            1973?

                   “2.   If a political    action committee    is alpolitical
            committee’     for the purposes      of the Act, may funds legally
            bc contributed     t’o it by its Members     or sponsoring     organi-
            zation for payment of its own operating          expenses?




                                       p. 881
The Honorable       A. R.        Schwartz,            page     3   W-189)




                     “3. If a political  action committee      is a ‘political
              committee’   for the purposes      of the Act, are contributions
              made to such political    action committee      by its members
              and others legal political     contributions   under the ActTrii
                                                    .
        In determining     the scope to be accorded     “political  committee”                                   it is
our obligation    to “look   diligently for the intention   of the Legislature.                                  ”
Article   IO, Vernon’s     Texas Civil Statutes.

       The Code Construction                    Act    (Article       5429b-2,          V. T. C. S.)    instructs
us that, in this search,

              (a) “Words    and phrases     shall be read in context and
              construed   according     to the rules of grammar    and
              COMMOn    Usage.   .  . . ” [ 5 2. ot]



              (b)   ” .     .    .    [I]t is presumed             that

                          “(I) compliance with the constitutions   of this
                          state and the United States is intended;

                          “(2)       the entire       statute       is intended         to be effective;

                          “(3)       a just and reasonable                result    is intended;

                          “(4)       a result     feasible         of execution         is intended;       and

                          “(5) public interest                 is favored        over     any private
                          interest.  ” [§ 3.011

               (c) “In construing   a statute,   whether                           or not the statute
              is considered     ambiguous    on its face,                          a court May consider
              among    other matters    the

                          “(I)       object   sought         to be attained;

                          “(2)       circumstances             under      which     the statute     was
                          enacted:




                                                        p. 882
The Honorable     A. R.     Schwartz,       page   4    (H-189)




                     “(3)     legislative    history;

                     “(4) common     law or former statutory  provisions,
                     including   laws upon the same or similar    subjects;
                                                 .
                     “(5)     consequences         of a particular    construction;’

                     “(6)    administrative         construction     of the statute;   and

                     “(7)     title,   preamble,        and emergency     provision.   ”
                     [§ 3.031

        Article   14.02 ,of the Election    Code, prior to the 1973 amendments,         per-
mitted the appointment       of a campaign      manager    by a candidate  for election   to a
state or local office.      As amended,      the Article   now requires   designation    of a
campaign      manager    by candidates    for election   to such an office or in an election
involving    a statewide   measure.      This requirement      is made to apply with equal
force to poiitical    committees,      as well.

       Article  14.03 lists specific  permissible  expenditures     tohemade bycandi-
dates and their campaign      managers.    The 1973 Act adds political     committees
to the coverage   of the Article   and adds one permissible     type of expenditure.

      Article    14.04 specifies    three types of contributions which may be made
by persons    other than corporations     and labor unions, and requires   that all
other campaign     expenditures     must be made by a candidate,   campaign   manager,
or campaign     manager    of a political committee.

        Amended   Articles       14.05 and 14.06 provide  civil         and criminal remedies,
respectively,   for illegal      contributions or expenditures,           but Make no mention
of political  committees.

       Article 14.07, as amended,     makes it illegal  for a corporation                    to give
anything of value to any candidate,     campaign   manager   or political                  committee
or any other person for certain    political  purposes.




                                              p. 883
The Honorable        A. Ii.   Schwartz,    page   5     (H-189)




      Article      14. OH, paragraphs   (a) and (b), requiring    the keeping of records
and the filing     of statements,   as amended,    applies    to political coMMittces.



        Paragraph     (c) of Article   14.08, spells out what must be contained     in
a report by a candidate       separately    from what must be contained    in a report
by a political   committee.        The statement   of a committee  shall list all con-
tributions   received    and expenditures      made by the committee;

                       If
          . . .           . . . Each statement     shall also include the dates
              and amounts of all expenditures,          loans made,     or debts
               incurred;      the full names and complete     addresses    of all
               persons      to whom any expenditures,      or loans made of more
               than Ten Dollars        ($10) was made or debt of More      than Ten
               Dollars     ($10) is owed; and the purpose of such expenditures,
               loans, and debts. ‘I


       Paragraph       (d) of Article     14.08 now reads:

                          “(d) Each political    committee   receiving    contributions
                 or making expenditures         on behalf of a candidate     shall
                 notify the candidate     as to the name and address        of the
                 political    committee   and its campaign     manager.       The can-
                 didate shall include within each statement          required    by this
                 code a list identifying      the name and address      of each such
                 political    committee   and campaign     manager.    ”

       Other paragraphs    of Article  14.08 set out the times            when statements
must   be filed, and set the penalties  for failing to file.

       The definition    of “political     committee”    found in the original    version
of House Bill 4 as it was introduced          in the Legislature,    spoke in terms       of a

“combination,    ” the”primary      or incidental    purpose of which” was to support
“any” candidate     or measure.        In the House committee      both “candidate”      and
“measu,re”    were made plural.          (The language was substantially       changed in
the confrrencc    coInrnitlcc   and these words were again made singular.)




                                            p.    884
The Honorable     A.R.    Schwartz,    page   6    (H-189)




         It is readily    apparent   that “political    committee,    ” as used in the context
of Chapter       14 of the Election   Code, may have several         different   meanings.     It
might mean a committee            formed   specifically    to support one candidate      or one
measure       to be the subject of an election.         This would no=lude          the so-cxd
political    action committees       which have continuity      and which may devote most
or a large part of their resources           to the support of an idea or issue and, coin-
cidentally      support those candidates      who deal favorably       with the issue.     Other
political    action committees       may be organized       on broader     grounds,   as for exam-
ple, to serve as the political         arm of a professional       or business association.
Such a committee         may be interested       in many ideas and may support many can-
didates.

        Subsidiary    questions    include:    Is a group “formed   to collect  contributions”
a political    committee    when that is only one of several      of its purposes?     Does
the requirement      that it be formed      to make contributims     in support for or
opposition     to “a candidate    or measure”      mean only one?     Does a committee
cease to be a “political”       one within the Act, merely      because it distributes     its
largess     to many candidates?

       The Secretary     of State, charged    by Subdivision   1 of Article     1.03, Vernon’s
Texas Election     Code,with   responsibility    for the uniform    application,      operation
and interpretation    of the election   laws, has issued his general         directive    under
the Campaign    Reporting   and Disclosure   Act of 1973. After quoting the statutory
definition of “political  committee   ” from the Act, his directive says:

                     “Entities   which are formed       to collect    contributions
              or make expenditures      in support for or in opposition           to
              candidates    or measures     to be on ballots are ‘political
              committees’.      The fact that the identity and/or number
              of such candidates     or measures      has not been determined
              at the time of the formation       of any said committees          does
              not exclude it from the definition        of ‘political   committee’
              and coverage     by the applicable     requirements.      ”

        WC have been favor&    with a great deal of assistance  from various    seg-
mcnts of the community    intcrcsted  in this question,   much of it favoring a
limited  construction.




                                          p. 885
The Honorable      A. R.   Schwartz,   page   7   (H-189)




       Those    uryingarestricted      view   suggest   the following   grounds:

      (a) A voluntary    fund for political    purposes    “is a group of contributors,
and not a committee     which ‘collects     contributions’    or ‘makes expenditures’
for a real political  committee    or a candidat’e.”

         (b)   Had the Legislature  intended that the coverage of the act include
political    action groups it should have done so in clear language.

       (c) A political action committee    is not formed     for the limited purpose
of supporting   or opposing 2 candidate   or measure,      but is instead formed to
advance common views of certain persons who voluntarily             donate funds which
may be used to support numerous       candidates  and public measures       or which
may be used to encourage      greater voter participation.

        (d) The Language of section     3 of House Bill 4 (amending   Article       14.32)
indicates   that a political  committee    “in any such election” indicates        reference
to an election   involving   but one candidate.

         (e) The Act requires       political committees   to designate    campaign     mana-
gers.      Since a political   action committee     does not “manage”      an election,   it
is illogical    to require   it to have a campaign     manager.

       (f) If it were required    to appoint a campaign    manager,  the Act apparently
would require     a political action committee    to appoint one for each candidate   it
supported,     even if it supported   two men in the same race.

      (g) The requirement   that no contribution     be received    until after appoint-
ment of a campaign    manager,   if applied to a continuing     political   action commit-
tee, would prevent it from receiving      funds, for   example,    for   operating expenses.

       (h) Since the Act is a penal statuteit  must be strictly     construed.    There is,
at least, a substantial   question as to whether political    action committees     were
intended to bc included within the definition   of “political   committee”     and, thcre-
fOrI?, they should lx* c’x‘:ludcd.




                                          p. 886
The Honorable     A. R.   Schwartz,      page     8    (H-189)




        (i) If the Act encompasses political   action            committees     in the definition
of “political    committee”  it is an unconstitutional             infringement     upon First
Amendment        rights.

        (j) Section 8 of House Bill 4 (Article       14. 07 of the Election   Code) pro-
hibits loans to candidates        or committees     by corporations    except that a
corporation      legally   engaged in the business     of lending money may make a
loan to a candidate,        but not to a committee.      Therefore,   if the broad inter-
pretation    is given to “political     committee,   ” the Act would violate    both State
and Federal       Constitutions.

        (k) The listing in the Act of campaign      expenditures    which a candidate
or political   committee     may make does not include contributions        to candidates,
thus indicating    that the Legislature    did not intend inclusion   of political  action
committees     in the definition   of a “political committee.    ”

       (1) The expenditures    authorized   by the Act do not cover legitimate    and
necessary    “on-going”   expenditures    and indicate an intent that political action
committees     not be covered.

          (m) The Act does not provide          for the reporting   of contributions         by
political    committeesto    candidates,         indicating an intent that political         action
committees      not be covered.

       (n) Inclusion    of political action committees                would   impose   on. them
unreasonable     filing and reporting     burdens.

       Countering    these   arguments      are       the following     by those   who advocate
a broad interpretation:

       (I) The statutory   definition  of “political committee”     refers  to “any                 group
of persons”   and indicates    an intent that the definition  be all inclusive.

       (2) ,Thc Act, considering     its caption and provisions     found throughout,
was intended to “insure    that all contributions      and expenditures   for political
purposes    arc regulated,  controlled    and identified.   ”




                                           p. 887
   .




The Honorable      A. 17. Schwartz,     page   9   (H-189)




       (3) Amended     Article    14.08 of the Code, having to do with the statements
to be filed,  recognizes      that political     committees     may have continuing existence..
See, particularly,     subsections      (h) (4) (ii) and (h) (5).

          (4) Historically,      the Legislature     has recognized  and regulated   the
political     activities    of entities    other than the candidate or his campaign     manager.
See, Article        211, Vernon’s       Texas Penal Code, repealed     1963; and Article   14. 10,
Election      Code as amended in 1967.

       (5) The enactment     of House Bill 4 was made necessary,   in large part,
by the development     of the political  committee as a means of avoiding  disclosure
of campaign   contributions    by individuals.

       All   of these arguments,      pro and con,     have   been helpful.      We will   discuss
themlater     in this opinion.

       Our attention    has been called to the Federal     Election    Campaign    Act of
1971, 2 U.S. C. $ 431, et seq.,     which defines  “political    committee”     as  “any
committee,    association,    or organization  which accepts      contributions    or makes
expenditures   during a calendar     year in an aggregate     amount exceeding       $1,000.”
[2 U.S. C.    9431(d)].

        This statutory     definition   has been construed     in only one reported    discussion
so far as we have been able to discover.             In United States v. ~The National      Corllmit-
tee for Impeachment,         469 E 2d 1135 (2d Cir.      1972), the Committee    ran a newspaper
advertisement      calling   for impeachment      of the President.     The United States sued
under the federal       act and the Committee       was temporarily    enjoined from accepting
contributions     or disbursing      funds until it first filed the statements   and reports
required    of political   committees.       The Court of Appeals     reversed,   holding th;l t.
publication    of the advertisement       alone did not make the Committee        a politic=
committee     and warning      that any other holding would raise serious        constilutional
questions.

       In deciding     that the words “made for the purpose of influencing,           ” usorl 1~1
the statutory    <lc,finitions of “contributions”     and “expenditures.   ” mean “o~a(lc with
1~11~
    authorization      or <-onsetIt, cxprcas     or implied,   or under the: control,    rlirc:<:t.
or indirc<,t,   of a c-andidatc or his agents, ” the Court quoted from Emerson,                .-‘l’h(:
System of Freedom           of Expression,    (Vintage cd. 1970),  p. 640:




                                           p. 888
.   .




    The Honorable    A. R.   Schwartz,    page    LO (H-1891




                           “[R]egulations     confined   to candidates     and election
                  campaigns       are directed    to a limited end and deal with a
                   limited    situation.   Hence they can be formulated          with
                  some objectivity.ard       avoid the dangers       of abuse in admin-
                  istration.       This cannot be done with regulations         . . .
                  addressed       to the innumerable      different   kinds of people
                   seeking to express       themselves     for different    purposes
                  throughout      the whole system of free expression.          ”

          The problem        facing the Court in the National Committee    for Impeachment
    case was whether       the statute should be so broadly construed   that it might infringe
    other constitutionally      guaranteed rights.  To avoid such a conflict   it concluded
    that:

                          “Congressional     concern was with political     campaign
                  financing,   not with the funding of movements       dealing with
                  national policy.     Admittedly,    under this interpretation,
                  enforcement     of the Act may be made somewhat         more’
                  burdensome,      as the supervisory    officials will be forced
                  to glean the principal     or major purpose of the organizations
                  they seek to have comply with the Act. ” ‘(469 F. Zd at 1141-
                  1142)

            We feel that the same irxterpretation         may and should be given to the
    Texas Campaign       Reporting    and Disclosure       Act of 1973. The legiqlative       con-
    cern was with political      campaign    financing,     and not with the funding of other
    movements.      To limit application       of the Act to committees       which are organized
    for the purpose of supporting        only one candidate       or measure    in one election
    would be too narrow       to achieve   the legislative     purpose.    On the other hand to
    require   any organization     that ever contributed        to any candidate   or that ever’
    supported   the adoption of any measure          to come under the Act, would be so broad
    as to possibly   infringe    upon First Amendment          rights.   See United States v. Robe1
    389 U.S. 258 (1967); Mills v. Alabama;             384 U.S. 214 (1966); NAACP        v. Alabama,
    357 U.S. 449 (1958).

           We conclude   that the overriding    intent of the Legislature     in enacting   this
    statute was to require   that all contributions    to all candidates    and all contribution.
    made to influence  a referendum      on a measure     be reported    in such a manner as tc,




                                             p.   a89
The Honorable      A. R    Schwartz,      page   11 (H-189)




become public information.       The climate     in which the 63rd Legislature                 met
and adopted this and other reform      Legislation   was one of intense awareness                    of
the recent Sharpstown     scandal and the Watergate       revelations.    Reform              was

one of the principal  issues to the Texas voters       in the 1972 elections.
                                                  .
       With this background,      we do not believe    the Legislature    intended to
limit the requirements      of the Campaign   Reporting     and Disclosure     Act of 1973
so that continuing  political   action committees,      through which massive       sums
might be collected   and distributed    to candidates,     might continue to operate’
without regulation.

        As we interpret    the Act, political   action committees     may be, but are
not necessarily,     subject to its provisions.      Conceivably,  such a group formed
to achieve    its purposes   through educating    the public generally   and not for the
election   of a candidate   or adoption of a measure,       may never come within its
coverage.

        But, according        to our interpretation,        once a group has as one of its
principal    or major purposes         the collection      of contributions      and/or the making
of expenditures       for one or more state or district            candidates     or one or more
measures      to be voted upon at an election,           it must follow the requirements              of
the Act insofar as it collects          and expends funds for those purposes.                 Thus, the
question    of whether an orga&ation,             called a political      action group or something
else,   must    be  considered     a “political     committee”      for   the purposes      of theTexas
Campaign      Reporting     and Disclosure        Act of 1973 at any particular          time will be
a question     of fact to be determined         in each case by what are the principal               and
major purposes         of the organization       at that time and whether one of them is to
collect   contributions      and make expenditures           in political     campaigns,     involving
measures      as well as candidates,

        Whether   or not it is appropriate    to require a committee     supporting    more
than one candidate     or measure    to appoint a single campaign      manager     or one
manager     for each candidate   is a matter for legislative     wisdom.     We believe
the Legislature    intcndcd multiple    managers    where appropriate.      We have examined
all of the’ arprrmcnts   ~nsdc in favor of the limited construction      (summari~..cd    nhvc)
and find none that c-onvinccs LIs that the Legislature       intcndcd that all the ~:~nlpnign
co~~tributions   and ~rxp<~nditurcs which are and may be funnclcd through a polilicnl




                                             p. 890
.,   ._



           The Honorable      A. R.     Schwartz,     page 12 (H-189)




           committee     were to escape public scrutiny   merely   because the political
           committee     is continuing and supports  multiple  candidates  and measures.

                   Our conclusion  is also supported   by the often-cited          case   of People
           v.   Gansley,  158 N. W. 195 (Mich.  1916).     r

                   We have not been asked to elaborate           upon the manner in which political
            action groups should comply with the Act, and we shall not do so.                     Wedo
            point out, however,    that the Act, itself,       quite clearly    indicates    its application.
            For example,    the expenditures      limited by amended Article            14.03 of the Code
           are “campaign     expenditures”;     Article     14.04 prohibits     a political    committee
           from receiving     “campaign     contributions    ” from corporations         and labor unions;
            the inhibition against   loans, found in amended Article             14.07, is against loans,
          “for the purpose of aiding or defeating         the nomination      or election    of any candidate
            or of aiding or defeating    the approval      of any political     measure     submitted    to a
            vote of the people of this state or~any subdivisions            thereof”;    and so on.

                   We answer     your    questions:

                  1. Whether or not the political       action committees       which you have described
           are “political    committees”     for the purposes    of the Texas Campaign     Reporting
           and Disclosure      Act of 1973 will depend upon a factual determination        of whether,
           at the particular     point in time, they have as principal      or major purposes     (not
           necessarily    the exclusive    purpose)  the collection    of contributions  and expendi-
           ture of funds’in political     campaigns.

                  2. An organization  deemed a “political            committee”  under the Act is
           limited in the “campaign  expenditures”     which         it may make but not as to other
           expenditures  which are otherwise    legal.
                                                                                                          \
                    3. Campaign   contributinns made to a political    action group which is a
           “political  committee”   under the Act, if otherwise    legal,   are legal political con-
           tributions.




                                                        p.   891
        . .     .
.
    .   ._



              The Honorable      A. R.   Schwartz,    page   13 (H-1891




                                    Organizations    having among their pr,incipal or
                             major purposes      the collection   and expenditure     of funds
                             in poLitical campaigns      covered    by’the Campaign     Reporting
                             and Disclosure     Act of 1973, are “poli.tical     committees”
                             under the Act and are subject to its terms.           Such an
                             organization   which has other purposes         is not limited   by
                             the Act as to the receipt      of contributions    or the expendi-
                             ture of funds for those other: purposes.

                                                        v    ry truly    yours,




                                                      P JOHN I,.
                                                        Attorney
                                                                 &/-WLiQ


                                                                        HILL
                                                                        General   of ‘I’cxas

              APPROVED:




              DAVID     M.   KENDALL,      Chairman
              Opinion   Committre




                                                        p. 892
