August 27, 2004
The unpublished opinion

Interesting - an unpublished opinion by the Texas Ethics Commission in 1998 suggests that yes, corporate donations to PACs for political purposes are banned by state law.

Fred Lewis, executive director of Campaigns for People, said the unpublished opinion shows that the Ethics Commission did nothing despite believing that corporate contributions to PACs, which now amounts to millions a year, are prohibited under Texas law.

"I believe if the Ethics Commission knows something is illegal and it is occurring, they have a duty to enforce the laws of Texas," said Mr. Lewis, who obtained the opinion draft through the Texas Public Information Act.

"They do not fulfill their duties by doing nothing," he said.

Sarah Woelk, the commission's acting executive director and the author of the unpublished opinion, said the draft was a cautious reading of a law that contains ambiguity. She said it would not have served as an ultimate authority on what is legal.

"I think it's an open question. It's not one of these easy opinions," she said.


State and federal law prohibit corporations from using their wealth and shareholder's money to make political contributions, but there is an exception: They can pay for "administrative expenses."

The draft shows that initially Texas law copied federal law, which only allows a corporation to cover the administrative costs of its own PAC.

But the wording of the Texas statute was changed in 1975 so that one or more corporations could "finance the establishment or administration of a general-purpose political committee."

Some lawyers now interpret that to mean that corporate donations to third-party PACs are allowed.

To Terry Scarborough, the attorney for TRMPAC, there's no question about it.

"It is the black-letter wording of the law," he said. "God only knows why the Ethics Commission didn't issue that opinion, but had they issued it, it would have flied in the face of the statute."

Ms. Woelk said still at issue is what is an "administrative expense," which TRMPAC has interpreted as expenditures that pay for the political work at the essence of a PAC, but that don't promote a specific candidate.

But if administrative expense comes to mean only rent and utilities, PACs wouldn't be interested in corporate funding because they could only use those donations in a very limited way, she said.

Lawyer Scarborough's assertion that "administrative expense" has a very broad meaning was examined in more detail in the AusChron piece I linked to yesterday.

In the courtroom and on the PR trail, attorney Scarborough has taken the novel position that the longtime Texas political understanding of "administrative expenses" is in fact a mass delusion. Instead, he insists, the relevant Texas law (and Ethics Commission opinions) only forbids the use of corporate funds for "express advocacy" urging voters to vote for or against a particular candidate. "It may be that the TAB pushed the envelope a little further [in their advertising]," Scarborough told me, "but what TRMPAC did, didn't even come close to the line." Asked if he thought the court would share his interpretation, he continued, "My case is going to turn on that [express advocacy], and I'm going to win because of it."

As noted above, Scarborough thinks that unpublished opinion is inconsistent with the law. I suppose we'd have had a court decision over that interpretation well before now had that opinion seen the light of day back in 98. We'll get one now, for what it'll be worth.

Posted by Charles Kuffner on August 27, 2004 to Scandalized! | TrackBack