Campaign Spending Commission

     An attorney has requested an advisory opinion as to the application of section 11-204(b), Hawaii Revised Statutes (“HRS”), to his client, a non-profit trade association.

     Section 11-204(b), HRS reads as follows:

(b) No person or other entity shall make contributions to a noncandidate committee, in an aggregate amount greater than $1,000 in an election; except that in the case of a corporation or company using funds from its own treasury, there shall be no limit on the contributions or expenditures to the corporation of company noncandidate committee.

     The two questions raised in the inquiry are:

1. Does the $1,000 “in an election” limitation permit contributions to a noncandidate committee in an aggregate amount greater than $1,000 to be made when an election is not occurring? and

2. Are the terms “corporation” and “company” broadly defined to include tax-exempt organizations and trade association such as I.R.C. 501(c) (6) trade associations?

     The time period applicable to contribution limits to noncandidate committees differs from that applicable to contribution to parties or candidates. Contributions to candidates are limited within “an election period” (HRS 11-204(a)). Contributions to noncandidate committees are limited “in an election” (HRS 11-204(b)). Contributions to political parties are limited “in any election year” (HRS 11-204(1)). Contributions by political parties are limited “in an calendar year” (HRS 11-205).

     Section 11-191, HRS defines “election period” to encompass the period between general election days for the office sought. It defines “election” to mean any election for office. References to the time period “in any calendar year” and “in any election year” are self explanatory and distinct. Each term is therefore distinct and we must assume that the legislature intended different effects in utilizing the different terms. Consequently the time periods identified above are not coextensive and will not be treated as such for the purposes of section 11-204, HRS.

     Each of the other terms utilized to identify contribution limit periods encompasses discrete periods of time. The term “in an election” utilized to identify the noncandidate committee limitation period is more ambiguous. “Election” refers to a specific date when each primary, general or special election is held. It would be absurd to limit contributions only on the day of the election. So some discreet period that is applicable to any specific election must be identified. The discreet period with respect to each election is the period between elections.

     We believe that the legislature intended different effects by utilizing different terms. Because we believe that the period associated with the term “in an election” is best understood as the period between elections, we conclude that the term, as used in section 11-204(b), HRS limits contributions to noncandidate committees to $1,000 for each period between each election.

     An individual or entity may therefore contribute $1,000 to a noncandidate committee in the period between a general election and subsequent primary or special primary election; another $1,000 may then be contributed during the period between the primary and subsequent general. Contributions may not be consolidated or designated since such practices may frustrate the purposes of both disclosure and limits.

     As a general rule, Hawaii’s campaign spending law provides organizations with the rights and privileges of individuals. They are subject to virtually identical contribution, registration, and reporting requirements. They are potentially subject to similar sanctions. In 1997, the legislature further ensured effective equality by permitting a “corporation or company” to make unlimited contributions to its own noncandidate committee.

     The second issue raised in this inquiry is whether “corporation or company” encompasses organizations such as trade associations. A corporation is generally understood as “an artificial person or legal entity created by or under authority of the laws of a state. An association of persons created by statute as a legal entity.” (Black’s Law Dictionary, 340, 6^th ed. 1990) A company is a “union or association of person for carrying on a commercial or industrial enterprise; a partnership, corporation, association, joint stock company.” (Id at 280) These definitions appear to encompass virtually every imaginable organization of individuals, which is itself possessed of legal rights and obligations.

     It may of course, be possible to pursue fine legal distinctions in what might qualify as a “corporation” or “company” under one or another of our state’s statutes. But in this case there is no point in doing so. In applying our statutes we must “look to the reason and spirit of the law, and the cause that induced the legislature to enact it…”(HRS 1-15, 1993) As discussed above, we believe that the purpose of section 11-204(b), HRS with respect to corporate or company contributions to its own noncandidate committee was to effect equality with respect to the treatment of individuals and organizations. Accordingly, we conclude that any legally established organization that is possessed of legal rights and obligations under the laws of our state will be considered a corporation or company for purposes of section 11-204(b), HRS.

     This Advisory Opinion is provided by the Commission as a means of stating its current interpretation of the Hawaii Election Campaign Contributions and Expenditures laws provided under HRS section 11-191, et seq. and the administrative rules of the commission provided in chapter 2-14.1, Hawaii Administrative Rules. The Commission may adopt, revise or revoke this Advisory Opinion upon the enactment of amendments to the Hawaii Revised Statutes or the adoption of administrative rules by the Commission.

Dated: Honolulu, Hawaii, May 12, 1998.

CAMPAIGN SPENDING COMMISSION

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A. Duane Black
Chairperson

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Della Au
Commissioner

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Clifford Muraoka
Commissioner

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May Oshiro
Commissioner