STATE OF HAWAII
APPEAL OF
CHARMAINE TAVARES CAMPAIGN RULING
Findings of Fact, Conclusions of Law Background Hawaii Revised Statutes
(“HRS”) Previous to the Tavares ruling, corporations and companies that used treasury funds for contributions made their contributions through a noncandidate committee (a paper registration and reporting mechanism to provide transparency), so the public could determine which candidates corporations and companies were contributing to and how much they were contributing. For example, the public could view Contractor XYZ’s noncandidate committee report and see all the candidates that Contractor XYZ contributed to and see how much was contributed to each candidate. If there were no noncandidate committee reports, and the public wanted to know which candidates Contractor XYZ contributed to, the public would have to view close to 300 candidate reports, looking for the name “Contractor XYZ” as a contributor, to obtain the same information. Between 1997 and January 1, 2006, HRS section 11-204 (b) permitted corporations and companies to use an unlimited amount of their treasury funds for contributions that flowed, first, through their noncandidate committee (a report), and then to a candidate. It provided: No person or any 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 contributions or expenditures to the corporation or company noncandidate committee. (Emphasis added.) Thus, during that time, a corporation could give the maximum contribution (as limited in HRS section 11-204 (a)), (e.g. $4,000 for Senator) to every candidate running for office because HRS section 11-204 (b) did not limit amounts that could be contributed from a corporation’s treasury, to its noncandidate committee. The corporation or company would then make contributions to candidates from its noncandidate committee. However, the legislature passed Act 203, effective January 1, 2006, which amended HRS section 11-204 (b), repealing the authorization for corporations to put unlimited funds from their treasuries into their noncandidate committees, as follows:
No person or any other entity shall make contributions to a
noncandidate committee, in an aggregate amount greater than $1,000 in an
election; Thereafter, the Commission enforced the new $1,000 limit on contributions from corporate and company treasuries to their noncandidate committees. Additionally: HRS section 11-191 defines a “noncandidate committee” as follows:
HRS section 11-191 defines a “committee” in relevant part as:
Maui Circuit Court Ruling On July 23, 2007, the Maui Circuit Court filed Findings of Fact, Conclusions of Law, and Order. The Court determined that Quong Enterprises, L.L.C., Talboy Construction, Inc., Cheeseburger in Paradise, Inc., and Cheeseburger in Paradise-Waikiki, were not noncandidate committees when they made contributions directly from their treasuries to the Tavares campaign, and that they could each contribute up to $4,000 directly from their treasuries to the Tavares campaign. Appeal The Commission is appealing this ruling.
Advice Ř If you are a corporation or company and are considering making contributions directly to candidates from your treasury, without registering and reporting with the Commission, or without following the contribution limits in HRS section 11-204 (b), you may want to consult with your attorney. Ř Since the Maui Circuit Court held that corporations and companies making contributions directly from their treasuries are not noncandidate committees, the Commission will not be enforcing registration and reporting requirements for such corporations and companies until the Appeal is decided. Ř Because the Maui Circuit Court held that corporations and companies making contributions directly from their treasuries to candidates may contribute up to the limits in HRS section 11-204 (a), the Commission will not enforce the contribution limits for such corporations and companies in HRS section 11-204 (b) until the Appeal is decided. This means corporations and companies making contributions directly from their treasuries to candidates may use unlimited funds from their treasuries, because HRS section 11-204 (b) is not applicable to these corporations and companies. Ř If you are a corporation or company receiving contributions from any source other than the corporate treasury, or in addition to the corporate treasury, you are a noncandidate committee and must register and file reports when reaching the threshold. The threshold for registration and reporting is when the noncandidate committee receives contributions or makes expenditures more than $1,000 in a two-year election period (which is now November 8, 2006 through November 4, 2008). |
