After Citizens United, do Tennessee corporations have to file campaign finance disclosure reports for political ads they pay for on their own?

Plain-English summary

This opinion is the natural follow-up to Op. 10-30, which concluded that Tennessee's ban on corporate political expenditures (Tenn. Code Ann. § 2-19-132) was likely unconstitutional after Citizens United v. FEC. Once a corporation can make independent expenditures supporting or opposing candidates, the next question is: does the corporation also have to file campaign finance disclosure reports? Representative Eddie Yokley asked the AG that question. House Bills 3587 and 3626, then pending in the General Assembly, would have explicitly required corporations to file disclosure reports.

AG Cooper's answer separated two situations:

1. Corporate ballot-measure spending: must disclose. Tennessee's Campaign Financial Disclosure Act, Tenn. Code Ann. §§ 2-10-101 et seq., defines a "political campaign committee" in § 2-10-102(12). Subsection (B) of that definition specifically reaches "any corporation or any other organization making expenditures . . . to support or oppose a measure." So a corporation spending money on a ballot question (a referendum, constitutional amendment, or local initiative) already fits the definition and already triggers the filing obligations of §§ 2-10-105 (registering a treasurer, filing quarterly statements) and 2-10-106 (statement contents). One narrow exception: the disclosure does not apply to corporate communications with the corporation's own members or stockholders, provided the corporation is not "organized primarily for the purpose of influencing" elections (§ 2-10-102(4)).

2. Corporate candidate spending: not currently required. Subsections (A) and (C) of § 2-10-102(12) define a political campaign committee in ways that do not naturally fit a single corporation. Subsection (A) requires "a combination of two (2) or more individuals" — not just one corporate entity. Subsection (C) reaches "any committee, club, association or other group of persons" exceeding $250 of contributions or expenditures in a quarter; "person" is defined elsewhere (§ 2-10-102(10)) to include corporations, so subsection (C) applies to a group of corporations rather than to a single corporation. Reading the definitions in light of the original 1980 enactment is decisive: when the General Assembly drafted those subsections, corporations were prohibited from making candidate-related expenditures by Tenn. Code Ann. § 2-19-132. The legislature could not have intended to require disclosure of conduct it simultaneously banned. So a single corporation making independent candidate expenditures falls into a regulatory gap: the prohibition no longer survives Citizens United, but the disclosure requirement was never written to capture it.

The opinion notes that filling this gap with new legislation would not violate the First Amendment. Citizens United expressly upheld the federal disclosure and disclaimer requirements at 2 U.S.C. § 434(f)(1), holding that disclosure serves a substantial governmental interest in providing voters with information about who is paying for political messages, and that disclosure imposes no significant burden on First Amendment rights. The opinion quotes Citizens United's defense of disclosure: "Shareholders can determine whether their corporation's political speech advances the corporation's interest in making profits, and citizens can see whether elected officials are 'in the pocket' of so-called moneyed interests."

The practical takeaway in early 2010: until the General Assembly amended the disclosure act, corporations could make independent expenditures for or against Tennessee candidates without filing public disclosure reports about that spending. Ballot-measure spending was different. The legislature was free to (and ultimately did) close the gap.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Tennessee General Assembly did amend the campaign finance disclosure framework after Citizens United to address corporate and PAC reporting. The current Tennessee Registry of Election Finance regulations and Tenn. Code Ann. §§ 2-10-101 et seq. have evolved significantly since 2010. Anyone working on a current Tennessee campaign-finance disclosure question should look at the current statute, current Registry guidance, and post-2010 federal case law (including SpeechNow.org v. FEC and McCutcheon v. FEC).

Common questions

Q: What's an "independent expenditure" in this context?
A: Money spent by someone other than a candidate or campaign to advocate for or against the candidate, without coordinating with the candidate or campaign. A corporation that buys an ad supporting (or attacking) a Tennessee state senator on its own initiative is making an independent expenditure. Coordinated expenditures (contributions in coordination with the campaign) are treated as contributions, which raise different constitutional and statutory questions.

Q: What's a "measure" under Tennessee campaign finance law?
A: A ballot question, referendum, constitutional amendment, or other matter put before voters as a yes/no proposition (rather than a candidate election). Examples include local liquor referenda, constitutional amendments, and county-government bond questions.

Q: Why is corporate ballot-measure spending captured by the existing statute but candidate spending isn't?
A: Because the legislature in 1980 wrote the political-campaign-committee definition with the existing legal landscape in mind. Corporate ballot-measure spending was not banned by Tenn. Code Ann. § 2-19-132, so the legislature included corporations in the disclosure regime for ballot measures. Corporate candidate spending was banned by § 2-19-132, so the legislature did not draft the candidate-spending side of the disclosure regime to include corporations. The structure made sense at the time. Citizens United disrupted the symmetry.

Q: Does this mean a corporation can spend unlimited untraceable money on Tennessee candidates?
A: Untraceable in the sense that no Tennessee state-law disclosure attaches under the law as it stood in 2010, yes. But that does not mean unlimited or completely unregulated. Federal disclosure rules apply to federal candidate spending. Federal tax law (501(c) and 527 categories) applies. State-law campaign-contribution limits to candidates and parties remain. And the legislature could (and did) close the disclosure gap.

Q: Why would the legislature want to require this disclosure if corporations are now constitutionally allowed to spend?
A: Citizens United distinguished between bans on corporate political speech (unconstitutional) and disclosure requirements (constitutional). Disclosure does not stop the speech; it tells voters who paid for it. The Court's reasoning is that voters can give "proper weight to different speakers and messages" only if they know who the speakers are. Most state campaign-finance reforms in the post-Citizens-United era have focused on disclosure rather than on outright limits.

Q: Are there any current corporate disclosure obligations under federal law?
A: Yes. Federal law requires anyone (including corporations) making independent expenditures of more than $250 supporting or opposing a clearly identified federal candidate to file an FEC report identifying the spender, the amount, and the candidate (2 U.S.C. § 434(c) for non-political-committee filers and 2 U.S.C. § 434(f) for "electioneering communications"). Citizens United expressly upheld those federal requirements. State requirements vary.

Background and statutory framework

Tennessee adopted the Campaign Financial Disclosure Act in 1980 (Tenn. Code Ann. §§ 2-10-101 et seq.). The Act regulates contribution and expenditure disclosure for state and local elections. Federal candidate elections are governed by federal law (the Federal Election Campaign Act, administered by the FEC); the Tennessee Act applies to state legislators, statewide officers, judges, county officials, and ballot measures.

The Act's central regulatory unit is the "political campaign committee," which must register a treasurer and file disclosure statements. Tenn. Code Ann. § 2-10-102(12) defines that term in three subsections:

(A) "A combination of two (2) or more individuals, including any political party governing body . . . making expenditures, to support or oppose any candidate for public office or measure."

(B) "Any corporation or any other organization making expenditures . . . to support or oppose a measure."

(C) "Any committee, club, association or other group of persons which receives contributions or makes expenditures to support or oppose any candidate for public office or measure during a calendar quarter in an aggregate amount exceeding two hundred fifty dollars ($250)."

The definition of "expenditure" in § 2-10-102(6)(A) is purposefully broad: "a purchase, payment, distribution, loan, advance, deposit or gift of money or anything of value made for the purpose of influencing a measure or the nomination for election or election of any person to public office."

The definition of "person" in § 2-10-102(10) includes "an individual, partnership, committee, association, corporation, labor organization or any other organization or group of persons." So a "group of persons" under subsection (C) of the political-campaign-committee definition would technically include a group of corporations, but not a single corporation acting alone.

The opinion's textual reading of these definitions is precise. A single corporation:

• Does not fit subsection (A) (not "two or more individuals").
• Does not fit subsection (C) (subsection (C) reaches a group, not a single member of the defined "person" set).
• Does fit subsection (B) (a corporation making expenditures to support or oppose a measure), but only for ballot measures, not for candidates.

The contextual confirmation comes from § 2-19-132, the Tennessee statute prohibiting corporate political expenditures. As of 1980, when the disclosure act was enacted, corporations could not legally spend money on candidate elections. Drafting subsections (A) and (C) so that they did not capture single-corporation candidate spending was sensible: the spending was banned outright, so requiring disclosure of it would have been redundant.

After Op. 10-30 concluded that § 2-19-132 was likely unconstitutional under Citizens United, the structural assumption underlying the disclosure act broke. Corporations could now legally make independent candidate expenditures, but the existing disclosure regime did not capture them. Without legislative action, that conduct was reportable to no one (under Tennessee law).

The First Amendment portion of the opinion is straightforward. Citizens United, 130 S. Ct. at 914-16, expressly upheld the federal disclosure requirements at 2 U.S.C. § 434(f)(1). The Court explained that disclosure does not bar speech; it informs voters about the source of speech. Citing Buckley v. Valeo, 424 U.S. 1 (1976), the Court found a substantial governmental interest in providing the electorate with information about election-related spending. Those constitutional principles apply equally to state-law disclosure requirements: Tennessee may constitutionally require corporations to disclose independent expenditures, even though it cannot constitutionally ban them.

A small but important exception in § 2-10-102(4): the disclosure obligation does not apply to "any written, oral or electronically transmitted communications by a corporation to its members or stockholders, if the corporation is not organized primarily for the purpose of influencing the nomination for election, or election, of any person to public office." A trade association sending a voter guide to its members, or a publicly traded company sending shareholders a letter about policy issues, ordinarily does not trigger disclosure.

Citations and references

Statutes:

• Tenn. Code Ann. §§ 2-10-101 et seq. (Tennessee Campaign Financial Disclosure Act of 1980)
• Tenn. Code Ann. § 2-10-102(4) (member/stockholder communications exception)
• Tenn. Code Ann. § 2-10-102(6)(A) (definition of "expenditure")
• Tenn. Code Ann. § 2-10-102(9) (multicandidate political campaign committee)
• Tenn. Code Ann. § 2-10-102(10) (definition of "person")
• Tenn. Code Ann. § 2-10-102(12) (definition of "political campaign committee")
• Tenn. Code Ann. § 2-10-105 (disclosure statement filing requirements)
• Tenn. Code Ann. § 2-10-106 (contents of disclosure statements)
• Tenn. Code Ann. § 2-19-132 (corporate funds for elections)
• 2 U.S.C. § 434(f)(1) (federal disclosure of independent expenditures)

Cases:

• Citizens United v. Federal Election Commission, 130 S. Ct. 876 (2010), U.S. Supreme Court (corporate independent expenditure ban unconstitutional; disclosure requirements upheld)
• Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), U.S. Supreme Court (overruled by Citizens United)
• First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978), U.S. Supreme Court (corporate political speech protected)
• Buckley v. Valeo, 424 U.S. 1 (1976), U.S. Supreme Court (disclosure of independent expenditures upheld)

Prior AG opinions:

• Op. Tenn. Att'y Gen. 10-30 (March 11, 2010) (Tenn. Code Ann. § 2-19-132 unconstitutional after Citizens United)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2010/op10-039.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
PO BOX 20207
NASHVILLE, TENNESSEE 37202

March 30, 2010

Opinion No. 10-39

Filing of Disclosure Statements By Corporations For Independent Expenditures

QUESTION

Whether a corporation would be required to file a report of its independent expenditures in the same manner as a political campaign committee under Tennessee's current campaign finance laws.

OPINION

Under the plain language of Tenn. Code Ann. § 2-10-102(12)(B), if a corporation is making expenditures to support or oppose a measure, then it meets the definition of a political campaign committee and, therefore, would be required to file disclosure statements in accordance with the requirements of Tenn. Code Ann. §§ 2-10-105 and -106. However, to the extent a corporation makes expenditures to support or oppose any candidate for public office, it does not meet the definition of political campaign committee set forth in Tenn. Code Ann. § 2-10-102(12)(A) or (C) and, therefore, would not be required to file statements disclosing its contributions and expenditures.

ANALYSIS

In Citizens United v. Federal Election Comm'n, 130 S.Ct. 876 (2010), the United States Supreme Court held that there is no legitimate governmental interest that would justify a ban on independent corporate expenditures. Accordingly, this Office has opined that Tenn. Code Ann. § 2-19-132 is unconstitutional to the extent that it prohibits corporations from making such expenditures. See Op. Tenn. Att'y Gen. 10-30 (March 11, 2010). House Bills 3587 and 3626, which are currently pending in the General Assembly, would require corporations to file statements of their independent expenditures, contributions, or both, with the Division of the Registry of Election Finance of the Bureau of Ethics and Campaign Finance. You have asked whether corporations are already required to file such disclosure statements in the same manner as a political campaign committee under Tennessee's current campaign finance laws.

In 1980, the Tennessee General Assembly adopted the Campaign Financial Disclosure Act, Tenn. Code Ann. §§ 2-10-101, et seq. ("the Act"), which regulates the disclosure of contributions and expenditures within the context of political campaigns. Under the Act, a political campaign committee is defined as follows:

(A) A combination of two (2) or more individuals, including any political party governing body, whether state or local, making expenditures, to support or oppose any candidate for public office or measure, but does not include a voter registration program;

(B) Any corporation or any other organization making expenditures, except as provided in subdivision (4), to support or oppose a measure; or

(C) Any committee, club, association or other group of persons which receives contributions or makes expenditures to support or oppose any candidate for public office or measure during a calendar quarter in an aggregate amount exceeding two hundred fifty dollars ($250).

Tenn. Code Ann. § 2-10-102(12).¹ An expenditure is defined as "a purchase, payment, distribution, loan, advance, deposit or gift of money or anything of value made for the purpose of influencing a measure or the nomination for election or election of any person to public office." Tenn. Code Ann. § 2-10-102(6)(A).

Tenn. Code Ann. § 2-10-105(e) requires each political campaign committee to certify the name and address of the committee's political treasurer to the registry of election finance or the county election commission, where appropriate, before the committee may receive a contribution or make an expenditure in a state or local election. Tenn. Code Ann. § 2-10-105(a) further requires each political campaign committee to file statements disclosing all contributions received and all expenditures made by or on behalf of such committee. Political campaign committees are required to file these reports on a quarterly basis, as well as a pre-primary and a pre-general statement in an election year. Tenn. Code Ann. § 2-10-105(c). Tenn. Code Ann. § 2-10-106 sets forth the information that must be included in these disclosure statements.

Under the plain language of Tenn. Code Ann. § 2-10-102(12)(B), if a corporation is making expenditures to support or oppose a measure, then it meets the definition of a political campaign committee and, therefore, would be required to file disclosure statements in accordance with the requirements of Tenn. Code Ann. §§ 2-10-105 and -106.² The issue remains, however, whether a corporation making independent expenditures for the nomination for election or election of any person to state or local public office meets the definition of a political campaign committee and therefore is required to file disclosure statements.

Subsection (A) of Tenn. Code Ann. § 2-10-102(12) defines a political campaign committee as a combination of two or more individuals making expenditures to support or oppose any candidate for public office or measure. Clearly, a corporation does not meet this definition as it is not a combination of two or more individuals. Similarly, a corporation does not meet the definition of a political campaign committee contained in subsection (C) of Tenn. Code Ann. § 2-10-102(12). That subsection defines a political campaign committee as a committee, club, association or other group of persons which receives contributions or makes expenditures to support or oppose any candidate for public office or measure during a calendar quarter in an aggregate amount exceeding two hundred fifty dollars ($250). However, the term "person" is specifically defined as "an individual, partnership, committee, association, corporation, labor organization or any other organization or group of persons". Tenn. Code Ann. § 2-10-102(10). Under this definition of "person," a political campaign committee as defined in subsection (C) would appear to apply only to a group of corporations and not an individual corporation. Such an interpretation is consistent with the fact that at the time the General Assembly adopted this definition of a political campaign committee, corporations were prohibited under Tenn. Code Ann. § 2-19-132 from making expenditures to support or oppose any candidate for public office. Consequently, the General Assembly could not have intended for a corporation to be included within this definition of a political campaign committee.

Accordingly, it is our opinion that, to the extent a corporation makes expenditures to support or oppose any candidate for public office, it does not meet the definition of political campaign committee set forth in Tenn. Code Ann. § 2-10-102(12)(A) or (C) and, therefore, would not be required to file statements disclosing its contributions and expenditures in accordance with the requirements of Tenn. Code Ann. §§ 2-10-105 and -106. We would note, however, that in striking down the ban on independent expenditures by corporations in Citizens United, the Supreme Court repeatedly recognized that corporations were simply associations of citizens that had taken on the corporate form. See Citizens United v. Federal Election Comm'n, 130 S.Ct. 876 (2010). For example, in rejecting the government's antidistortion rationale³ in support of the ban on corporate expenditures, the Court stated:

If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech. If the antidistortion rationale were to be accepted, however, it would permit Government to ban political speech simply because the speaker is an association that has taken on the corporate form.

Citizens United, 130 S.Ct. at 904 (emphasis added). The Supreme Court further noted that, if the ban on corporate independent expenditures were constitutional, wealthy individuals and unincorporated associations could spend unlimited amounts on independent expenditures, "[y]et certain disfavored associations of citizens — those that have taken on the corporate form — are penalized for engaging in the same political speech." Id. at 908 (emphasis added). In other instances, it is clear that the Court considered corporations simply to be one form of an association. Id. at 900 ("The Court has thus rejected the argument that political speech of corporations or other associations should be treated differently under the First Amendment simply because such associations are not 'natural persons.'" (citing First Nat. Bank of Boston v. Bellotti, 435 U.S. 763, 776 (1978)).

The Supreme Court went on to find that requiring the disclosure of corporate independent expenditures under 2 U.S.C. § 434(f)(1) was "justified based on a governmental interest in 'provid[ing] the electorate with information' about the sources of election-related spending," 130 S.Ct. at 914 (quoting Buckley v. Valeo, 424 U.S. 1, 66 (1976)), stating as follows:

[P]rompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation's political speech advances the corporation's interest in making profits, and citizens can see whether elected officials are " 'in the pocket' of so-called moneyed interests." The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.

Id. at 916 (internal citations omitted).

In summary, it is the opinion of this Office that current Tennessee law does not require corporations making independent expenditures for the nomination or election of any person to state or local political office to file statements disclosing such expenditures under the Campaign Financial Disclosure Act. The Supreme Court's opinion in Citizens United holds that legislation requiring such disclosure by corporations would not violate the First Amendment.

ROBERT E. COOPER, JR.
Attorney General and Reporter

MICHAEL E. MOORE
Solicitor General

JANET M. KLEINFELTER
Deputy Attorney General

Requested by:

The Honorable Eddie Yokley
State Representative
35 Legislative Plaza
Nashville, TN 37243-0111

¹ A multicandidate political campaign committee is defined as a "political campaign committee to support or oppose two (2) or more candidates for public office or two (2) or more measures." Tenn. Code Ann. § 2-10-102(9).

² This requirement does not apply to any written, oral or electronically transmitted communications by a corporation to its members or stockholders, if the corporation is not organized primarily for the purpose of influencing the nomination for election, or election, of any person to public office. See Tenn. Code Ann. § 2-10-102(4).

³ The Federal Election Commission had argued, relying upon the decision in Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), that the government had a compelling interest in preventing "the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public's support for the corporation's political ideas", i.e., the antidistortion rationale. Citizens United, 130 S.Ct. at 903.