Federal Election Commission Main Page
FEDERAL ELECTION COMMISSION
Washington, DC 20463
June 23, 2006
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 2006-17
Michael Kearney, Treasurer
Berkeley Electric Cooperative, Inc. Political Action
Committee
P.O. Box 1234
Moncks Corner, SC 29461
Dear Mr. Kearney:
We are responding to your advisory opinion request on
behalf of the Berkeley Electric Cooperative, Inc. ("BEC" or
"the Cooperative") and its separate segregated fund, the
Berkeley Electric Cooperative, Inc. Political Action
Committee ("BEC PAC"), concerning the application of the
Federal Election Campaign Act of 1971, as amended (the
"Act"), and Commission regulations to BEC's solicitation of
its executive and administrative personnel and its members,
including members who are employees, for contributions to
BEC PAC and certain other organizations. The Commission
concludes that BEC may solicit its executive and
administrative personnel, and its members, for contributions
to BEC PAC and to the Action Committee for Rural
Electrification ("ACRE"). The Commission further concludes
that BEC may use the proposed form to solicit these
contributions from its executive and administrative
personnel and its employees who are members, and that BEC
may use its payroll deduction system to collect and forward
these contributions from them.
Background
The facts presented in this advisory opinion are based
on your letters received on March 8 and May 1, 2006, and
your telephone conversation with Commission staff on May 4,
2006.
BEC is an electric distribution cooperative
incorporated under the laws of South Carolina. It is
composed of members who pay a membership fee to BEC and
agree to purchase electricity from BEC, as well as to be
bound by and comply with all of the other provisions of
BEC's Articles of Incorporation and Bylaws. BEC Bylaws,
Article I, Section 1.02. BEC's bylaws provide that a Board
of Trustees manages its business and affairs. BEC Bylaws,
Article IV, Section 4.01. Members of the Board of Trustees
must be members of the Cooperative. BEC Bylaws, Article IV,
Section 4.02(d). BEC members elect the Board members at the
Cooperative's annual meeting. BEC Bylaws, Article IV,
Section 4.03. Membership may be evidenced by a certificate
of membership. BEC Bylaws, Article VIII, Section 8.01.
Many of BEC's employees, including executive and
administrative personnel, are also members of BEC. BEC PAC
is BEC's separate segregated fund and is registered with the
Commission.
The National Rural Electric Cooperative Association
("NRECA") was established
To engage in the compilation and dissemination of
information with respect to rural electrification and
the furnishing of other services to rural electric
cooperatives and others in connection with the
coordination, advancement and development of rural
electrification in the United States . . . for the
primary and mutual benefit of the members of the
Association and their members, as ultimate consumers.
NRECA Bylaws, Article II. NRECA is a nonprofit corporation
under the District of Columbia Cooperative Association Act.
NRECA Articles of Incorporation, Preamble. ACRE is NRECA's
separate segregated fund and is registered with the
Commission.
Electric Cooperatives Help Organization ("ECHO") is
registered with the South Carolina Ethics Commission. ECHO
supports South Carolina State and local candidates. The BEC
Employee Fund is registered with the South Carolina Ethics
Commission. It makes contributions to South Carolina State
and local candidates.
BEC wishes to use a specific form to solicit
contributions for BEC PAC and ACRE. See BEC proposed
solicitation form (attached hereto as Exhibit 1). The form
offers three options for contributing: 1) recommended
contribution amounts to be deducted from the employee's
paycheck each pay period; 2) a one-time contribution, the
amount of which is left to the discretion of the employee;
or 3) an election not to participate. The form notes that
the recommended contribution amounts are "merely
suggestions," and that employees may choose to give "more or
less than those stated." The form further states, "BEC will
not favor nor disfavor employees according to pledged
donations." An additional statement reads "I am also fully
aware that should I elect not to participate I may do so
without any concern of retaliation." In addition, a bold
faced sentence states that the purposes of the organizations
for which contributions are being solicited is "for the
benefit of political candidates and activities on a state
and national level that support rural electric
cooperatives."
Questions Presented
1. May BEC solicit its executive and administrative
personnel, and its members, including members who are
employees, for contributions to BEC PAC?
2. May BEC solicit its executive and administrative
personnel, and its members, including members who are
employees, for contributions to ACRE?
3. If BEC may solicit these persons for contributions, may
it use its proposed solicitation form, and may it collect
contributions from them by means of payroll deductions?
Legal Analysis and Conclusions
Question 1. May BEC solicit its executive and
administrative personnel, and its members, including members
who are employees, for contributions to BEC PAC?
Yes, BEC may solicit its executive and administrative
personnel, and its members, including members who are
employees, for contributions to BEC PAC because it is a
membership organization and these individuals are within its
solicitable class.
Commission regulations define a "membership
organization" as a trade association, cooperative, or
corporation without capital stock that:
(i) Is composed of members, some or all of whom are vested
with the power and authority to operate or administer the
organization, pursuant to the organization's articles,
bylaws, constitution or other formal organizational
documents;
(ii) Expressly states the qualifications and
requirements for membership in its articles, bylaws,
constitution or other formal organizational documents;
(iii) Makes its articles, bylaws, constitution, or other
formal organizational documents available to its members
upon request;
(iv) Expressly solicits persons to become members;
(v) Expressly acknowledges the acceptance of membership,
such as by sending a membership card or including the
member's name on a membership newsletter list; and
(vi) Is not organized primarily for the purpose of
influencing the nomination for election, or election, of any
individual to Federal office.
11 CFR 114.1(e)(1)(i)-(vi); see also 11 CFR 100.134(e)(1)-
(6).
BEC is composed of members and its members qualify as
members under the Commission's regulations because they
affirmatively decide to become a member, affirm their
memberships frequently through the payment of monthly
electric bills, and have the ability to vote directly for
the Board of Trustees. See 11 CFR 114.1(e)(2) (defining
"member").
The members administer BEC by electing BEC's Board of
Trustees. The qualifications for membership in BEC are
clearly set forth in BEC's bylaws. The formal
organizational documents are available to members upon
request. Through its website, BEC solicits persons to
become members of the Cooperative by establishing electric
service through BEC and the website provides an on-line
application for membership. Membership in BEC may be
acknowledged via issuance of a membership certificate.
Finally, BEC was organized primarily to distribute electric
service and not for the purpose of influencing elections.
Because it satisfies these requirements, BEC qualifies as a
"membership organization."
Under the Act and Commission regulations, a membership
organization or a cooperative may solicit contributions to
its separate segregated fund from its members and its
executive and administrative personnel. See 2 U.S.C.
441b(b)(4)(C) and 11 CFR 114.7(a).1 Thus, BEC may solicit
its executive and administrative personnel, and its members,
including members who are employees, for contributions to
its separate segregated fund, BEC PAC.
Question 2. May BEC solicit its executive and
administrative personnel, and its members, including members
who are employees, for contributions to ACRE?
Yes, BEC may solicit its executive and administrative
personnel, and its members, including members who are
employees, for contributions to ACRE because it is
affiliated with ACRE's connected organization, NRECA, and it
may act as a collecting agent for ACRE.
A collecting agent may collect and transmit
contributions to one or more separate segregated funds to
which the collecting agent is related. See 11 CFR
102.6(b)(1). One example of a collecting agent is a
"parent, subsidiary, branch, division, department, or local
unit of the connected organization of the separate
segregated fund." 11 CFR 102.6(b)(1)(iii).
The Commission previously determined that NRECA and its
member cooperatives, taken together, form the type of rural
cooperative covered by 11 CFR 114.7(k)(1). See Advisory
Opinion 1999-40 (ACRE).2 As such, the member cooperatives
are affiliated with NRECA. Id. BEC is a member cooperative
of NRECA and, as stated in your request, its relationship
with NRECA is identical to NRECA's relationships with other
local distribution cooperatives, as described in Advisory
Opinion 1999-40 (ACRE). Thus, BEC is affiliated with NRECA.
The Commission further determined that, as affiliates
of NRECA, distribution cooperatives are local units of
NRECA. As local units, the distribution cooperatives may
act as collecting agents for contributions to NRECA's
separate segregated fund, ACRE. See Advisory Opinion 1999-
40 (ACRE). Thus, BEC may be a collecting agent for ACRE.
As a collecting agent for ACRE, BEC may solicit
contributions for ACRE from those persons permitted to be
solicited under 11 CFR part 114. See 11 CFR 102.6(c)(2).
As noted above, those persons include BEC's executive and
administrative personnel and its members, including members
who are employees.
Because BEC and NRECA are affiliated, their separate
segregated funds are considered one political committee for
purposes of applicable contribution limitations. See 11 CFR
114.7(k)(1). Accordingly, you should ensure that no
individual designates contributions to BEC PAC and ACRE in
any calendar year that would, when combined, exceed the
limitation at 2 U.S.C. 441a(a)(1)(C) and 11 CFR 110.1(d).
Question 3. If BEC solicits contributions from its
executive and administrative personnel and its members,
including members who are employees, may it use its proposed
solicitation form and may it collect the contributions from
them by means of payroll deductions?
Yes, BEC may use its proposed solicitation form
(attached Exhibit 1 hereto) and may use payroll deductions
to collect and forward certain contributions to BEC PAC and
ACRE.
Under the Act and Commission regulations, at the time
solicitations are made, solicitations for contributions to
separate segregated funds must inform employees and members
of the political purposes of the fund, and that any employee
or member solicited must be informed of the right to refuse
to contribute without any reprisal. See 2 U.S.C.
441b(b)(3)(B) and (C); see also 11 CFR 114.5(a)(3) and (4).
If guidelines for contributions are suggested, the person
being solicited must be informed that the guidelines are
merely suggestions, that the individual is free to
contribute more or less than the guidelines suggest, and
that an individual will not be favored or disadvantaged by
reason of the amount of their contribution or their decision
not to contribute. 11 CFR 114.5(a)(2). A written
solicitation for contributions to a separate segregated fund
that is addressed to an employee or member must contain
statements that comply with these requirements. 11 CFR
114.5(a)(5).3
The proposed form meets the requirements of 11 CFR
114.5(a). See 2 U.S.C. 441b(b)(3). A bold faced sentence
states that the purposes of the organizations for which
contributions are being solicited (including ACRE and BEC
PAC) is "for the benefit of political candidates and
activities on a state and national level that support rural
electric cooperatives." See BEC proposed solicitation form
(Exhibit 1). The form offers three options for
contributing. It notes that the first option contains
"merely suggestions," and that employees may choose to give
"more or less than those stated." Id. The form further
states, "BEC will not favor nor disfavor employees according
to pledged donations." Id. An additional statement reads
"I am also fully aware that should I elect not to
participate I may do so without any concern of retaliation."
Id. Taken together, these statements comply with 11 CFR
114.5(a)(2) and (a)(4). Accordingly, the proposed form
meets all of the requirements of 11 CFR 114.5(a)(5).
The proposed form identifies five different categories
of employees: supervisory hourly employees, non-supervisory
hourly employees, supervisory salaried employees,
non-supervisory salaried employees, and salaried staff. See
Exhibit 1. BEC may solicit salaried supervisory employees
and staff because they are "executive and administrative
personnel." See 2 U.S.C. 441b(b)(7); 11 CFR 100.134(d) and
114.1(c). Because hourly employees and salaried non-
supervisory employees do not meet the definition of
"executive and administrative personnel," BEC may solicit
only hourly employees and salaried non-supervisory employees
who are also members of BEC. See id. To make clear that
BEC is only soliciting contributions from its solicitable
class, the proposed form should be modified to add "(BEC
members only)" directly below "Non-supervisor" and
"Supervisor" under "Hourly," and directly below "Non-
supervisor" under "Salaried."
With respect to the use of payroll deductions to
collect contributions for BEC PAC, the Act and Commission
regulations allow a corporation to enroll members of its
restricted class in a payroll deduction system that deducts
contributions from payroll checks to make contributions to
the corporation's separate segregated fund. See 2 U.S.C.
441b and 11 CFR 114.2(f)(4)(i). Accordingly, BEC may use
payroll deductions to collect and forward contributions to
BEC PAC from its executive and administrative personnel and
its employees who are BEC members.
BEC may also use payroll deductions to collect
contributions to ACRE. Because BEC is a collecting agent
for ACRE, see above, BEC may pay any or all costs incurred
in soliciting and transmitting contributions to ACRE. See
11 CFR 102.6(c)(2)(i). The Commission previously determined
that an affiliated entity acting as a collecting agent may
use payroll deductions to collect contributions from its
executive and administrative personnel for the separate
segregated fund of another entity with which it is
affiliated. See Advisory Opinion 2000-15 (CUNA). The
Commission concludes that employees who are members of BEC
should be treated in the same manner as executive and
administrative personnel for purposes of payroll deductions.
Accordingly, BEC may use payroll deductions to collect and
forward contributions from executive and administrative
personnel and member employees to ACRE.
The Commission expresses no opinion regarding BEC's
solicitation of its executive and administrative personnel
and its members for donations to ECHO and the BEC Employees
Fund. Given that these two organizations are not involved
in Federal elections, questions regarding donations to them
are not within the Commission's jurisdiction.
This response constitutes an advisory opinion
concerning the application of the Act and Commission
regulations to the specific transaction or activity set
forth in your request. See 2 U.S.C. 437f. The Commission
emphasizes that, if there is a change in any of the facts or
assumptions presented, and such facts or assumptions are
material to a conclusion presented in this advisory opinion,
then the requestor may not rely on that conclusion as
support for its proposed activity.
Sincerely,
(signed)
Michael E. Toner
Chairman
Enclosure (Advisory Opinions 1999-40 and 2000-15)
_______________________________
1 "Executive or administrative personnel" is defined at
2 U.S.C. 441b(b)(7) and 11 CFR 100.134(d) and 114.1(c).
2 The Commission presumes that the facts that formed the
basis for this determination have not materially changed.
3 Solicitations by collecting agents must also meet all of
these requirements. See 11 CFR 102.6(c)(2).