Federal Election Commission Main Page
March 15, 1982
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1981-56
John J. Duffy, Esq.
Joseph M. Sellers, Esq.
Pierson, Ball & Dowd
1000 Ring Building
1200 18th Street, N.W.
Washington, D.C. 20036
Dear Messrs. Duffy and Sellers:
This responds to your letter of December 14, 1981,
requesting an advisory opinion on behalf of Satellite Business
Systems concerning application of the Federal Election Campaign
Act of 1971, as amended ("the Act") to the establishment of a
separate segregated fund by a partnership of corporations.
Specifically, your request poses three questions:
1. May a partnership of corporations establish a separate
segregated fund to solicit voluntary contributions from
the partnership's executive or administrative
employees?
2. May such a partnership solicit all of its employees or,
in the alternative, only its executive or
administrative employees for contributions to a
separate segregated fund of a trade association to
which the partnership belongs?
3. May a trade association to which such a partnership
belongs, and which has the consent of the partnership,
solicit the partnership's executive or administrative
employees for voluntary contributions to the trade
association's separate segregated fund?
Your request sets forth the following facts:
Satellite Business Systems ("SBS") is a partnership composed
of three unrelated corporations. The partners are Comsat General
Business Communications, Inc., a subsidiary of Comsat General
Corporation; Information Satellite Corporation, a subsidiary of
International Business Machines Corporation (IBM), and Aetna
Satellite Communications, Inc., a Subsidiary of the Aetna
Casualty and Surety Company. (The parent company of a partner in
SBS is referred to in your request as the "sponsor" of that
partner.)
Managerial control of SBS rests in a partners' committee,
which acts unanimously or by majority vote depending upon the
matter under consideration. The partners' committee has nine
members. Each partner appoints three members, and the appointees
of each partner collectively cast the single vote to which the
partner they represent is entitled. No director, officer or
employees of any of the partners, or their sponsors or affiliated
companies may be an officer or an employee of SBS.
SBS is a general (full) member of the Ad Hoc Committee for
Competitive Telecommunications (ACCT), which is a non-profit
corporation exempt from taxation under 26 U.S.C. SS 501(c)(6).1/
None of SBS's partners, nor their sponsors, are members of ACCT.
ACCT intends to establish a separate segregated fund and solicit
contributions from the executive or administrative employees of
its members. Provided that SBS annuity gives ACCT its consent,
ACCT proposes to solicit SBS's executive or administrative
employees for contributions to ACCT's separate segregated fund.
In response to your first question, the Commission concludes
that SBS may not defray the expenses of establishing a separate
segregated fund to solicit contributions from SBS's employees. The
Act provides only that a corporation, labor organization,
cooperative, or a corporation without capital stock may pay the
costs of establishing a separate segregated fund without such
payments resulting in a contribution or expenditure to the
separate segregated fund so established.2/ Accordingly, because
SBS is a partnership rather than a corporation, any funds spent
to establish and maintain a political committee would be a
"contribution" for purposes of the Act and subject to the
1/The Commission presumes but does not decide that ACCT is a
trade association within the meaning of the Act. See 11 CFR
114.8(a).
2/2 U.S.C. SS 441b(b)(2)(C) exempts from the definition of
"contribution or expenditure" for purposes of SS 441b the payment
of costs by a corporation for the "establishment, administration,
and solicitation of contributions to a separate segregated fund
to be utilized for political purposes by a corporation...."
(emphasis added).
limitations and prohibitions of the Act. See California Medical
Association v. Federal Election Commission, 101 S. Ct. 2712,
2724 (1981), Advisory Opinion 1981-54 and the Commission's
response to Advisory Opinion Request 1976-102 (copy enclosed).
Compare Advisory Opinions 1980-18, 1979-77, 1979-56, 1979-44,
1979-38, 1978-75, 1978-61, 1977-70, copies enclosed. Moreover,
because the partners in this case are corporations, and because a
contribution from a partnership is attributed to the partners,
the partnership would be prohibited under the Act from making any
contribution whatsoever in connection with a Federal election.
See 2 U.S.C. SS 441b(a) and 11 CFR 110.1(e). Since payment by SBS
of administration and solicitation costs of a political committee
represents a corporate contribution prohibited under the Act, the
partnership may not lawfully use its partnership funds to
establish and maintain a separate segregated fund or any other
type of political committee. Compare Advisory Opinions 1981-50
and 1980-132, copies enclosed.
The Commission notes, however, that each corporate partner
of SBS, or its sponsor corporation, may defray the costs of
establishing a separate segregated fund and solicit voluntary
contributions to such a fund from its own stockholders, executive
and administrative personnel and their families. See 2 U.S.C.
SS 441b(b)(4)(A)-(B). Moreover, the Act and Commission regulations
would not prohibit SBS's employees from establishing a political
committee independent of, rather than merely segregated from,
SBS's treasury and partnership funds.3/ See Bread Political
Action Committee v. Federal Election Commission, 635 F.2d 621
(7th Cir. 1980), (en banc); rev'd on juris. grounds, No. 80-1481
(March 8, 1982); see also Advisory Opinions 1981-54 and 1979-31,
copies enclosed. Although, as noted above, SBS may not make any
type of contribution to such a committee, SBS may support the
committee pursuant to the exceptions from the definitions of
contribution and expenditure for legal and accounting services.
To come within that exception SBS must be the regular employer of
any person performing the legal and accounting services, and the
services must be provided solely to ensure the political
committee's compliance with the Act and Commission regulations.
2 U.S.C. SS 431(8)(B)(ix), (9)(B)(vii); 11 CFR 100.7(b)(14),
100.8(b)(15) and 114.1(a)(2)(vii). Also, see Advisory Opinions
1981-54, 1980-137 and 1979-77, copies enclosed. Any payments by
SBS for these services are reportable by the political committee.
11 CFR 104.3(h).
3/A political committee of this type would be permitted to
solicit and accept otherwise lawful contributions from any person
and would not be limited to the classes of solicitees set forth
in 2 U.S.C. SS 441b(b)(4). See Advisory Opinion 1979-31.
The Commission considered alternative responses to questions
2 and 3 of your request but was unable to answer those questions
by the required affirmative vote of 4 members of the Commission.
2 U.S.C. SS 437c(c), 11 CFR 112.4(a).
This response constitutes an advisory opinion concerning
application of the Act, or regulations prescribed by the
Commission, to the specific transaction or activity set forth in
your request. See 2 U.S.C. SS 437f.