Federal Election Commission Main Page
June 30, 1989
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1989-8
Grant A. Billingsley
Manager, Public Affairs
Wagner & Brown
P.O. Box 1714
Midland, TX 79702
Dear Mr. Billingsley:
This responds to your letter dated May 3, 1989, as
supplemented by your letter and materials sent on May 29,
requesting an advisory opinion on behalf of Cyril Wagner,
Jr., and Jack E. Brown concerning the application of the
Federal Election Campaign Act of 1971, as amended ("the
Act"), and Commission regulations to the proposed
establishment of a separate segregated fund by Insilco
Corporation ("Insilco") and Messrs. Wagner and Brown.
According to your letter and an Insilco prospectus
sent with the May 29 letter, Mr. Wagner and Mr. Brown are the
sole partners of Wagner & Brown, a Texas general partnership.
Mr. Wagner also owns all of Cy-64, Inc. and Mr. Brown owns
all of Jack-64, Inc. These two corporations are the sole
partners of INR Partners, a Texas general partnership, which
has a majority interest (as to both stock ownership and
voting rights) in Insilco.
Insilco and Mr. Wagner and Mr. Brown wish to
establish a single separate segregated fund that will solicit
contributions from the executive and administrative personnel
(and their families) of Insilco, Wagner & Brown, and their
respective subsidiaries and affiliates. You state that
Insilco intends to pay all of the establishment,
administration, and solicitation costs associated with the
separate segregated fund. Attached to your letter is a list
of corporate subsidiaries and affiliates of Insilco and of
the partnership of Wagner & Brown. This list contains a
total of 27 "subsidiaries and divisions" of Insilco.
All but one of these entities is wholly owned by Insilco.1/
The list also contains three corporate "affiliates" of the
partnership of Wagner & Brown, all wholly owned by the
partnership.
You inquire whether it is permissible for the
proposed fund to be named "Insilco Corporation/Wagner & Brown
Political Action Committee" and whether the name of "Wagner &
Brown" must appear in the name of the fund. You also inquire
whether a separate segregated fund established by Insilco
would be permitted to solicit the executive and
administrative personnel (and their families) of Wagner &
Brown and the executive and administrative personnel (and
their families) of Wagner & Brown's corporate affiliates.
You have stated that Insilco Corporation will be
paying all of the establishment, administration, and
solicitation costs of the proposed separate segregated fund.
As such it will be the connected organization of the proposed
fund. See 2 U.S.C. ScSc431(7), 441b(b)(2)(C), and 11 CFR
100.6(a). The principal issue presented in your request is
the class of personnel who may be solicited. A corporation,
or a separate segregated fund established by a corporation,
may solicit contributions to such a fund from its executive
and administrative personnel, its stockholders, and the
families of such persons. 2 U.S.C. Sc441b(b)(4)(A)(i).
Commission regulations provide that a corporation's
solicitable class extends to the executive and administrative
personnel of its "subsidiaries, branches, divisions, and
affiliates and their families." 11 CFR 114.5(g)(1). The
term "affiliates" is not defined in the regulations. The
Commission, however, has explained that affiliate status
applies to entities that are wholly owned or controlled by
the same corporation or individuals.2/ Advisory Opinions
1983-48, 1982-18, and 1980-18. The Commission has also
________________
1/ According to the Insilco prospectus, the other
corporation, DAC Software, is "95.1% owned indirectly" by
Insilco.
2/ According to the Explanation and Justification of 11 CFR
114.5(g), ";t=he Commission's rationale for the solicitation
right is that all of the political committees set up by the
corporation, its subsidiaries, branches, divisions and
affiliates will, under the anti-proliferation provisions of
the Act, be subject to a single contribution limitation."
Communication from the Chairman, House Doc. No. 95-44, 95th
Cong., 1st Sess. (Jan. 12, 1977), p. 108. In implementing
the anti-proliferation provisions at 2 U.S.C. Sc441a(a)(5),
the Commission has referred to such indicia as ownership of
controlling interest in voting shares or securities;
provisions in governing documents giving one entity
authority, power or ability to direct another entity; and the
authority or power to appoint, discipline or remove or
otherwise influence the decision of an entity's officers.
11 CFR 100.5(g)(2) and 110.3(a)(1). See also Advisory
Opinions 1987-34, 1983-48, 1982-18 and 1980-18. Compare
Advisory Opinion 1981-54.
concluded that the term "affiliates" may include entities
other than corporations, including partnerships. Advisory
Opinions 1987-34 and 1983-48.
The executive and administrative personnel of the
twenty-seven corporate subsidiaries and divisions of Insilco
and the families of such personnel may be solicited by
Insilco for contributions to its separate segregated fund.
The partnership of Wagner & Brown, as an entity owned by the
same two individuals that control Insilco, is an affiliate of
the Insilco Corporation. In past opinions, the Commission has
concluded that the executive and administrative personnel of
a partnership affiliated with the connected organization of a
separate segregated fund may be solicited for contributions
to that fund. Advisory Opinions 1987-34 and 1983-48.
Similarly, the executive and administrative personnel (and
the families thereof) of Wagner & Brown may be solicited for
contributions to Insilco's fund. In addition, since the
partnership's corporate affiliates are owned by the same two
individuals who own a controlling interest in Insilco, the
executive and administrative personnel (and the families
thereof) of such corporations are solicitable for
contributions to the proposed fund.
Your request suggests that the foregoing conclusion
could be reached based upon the Commission's analysis in
Advisory Opinion 1979-77. In that opinion, the Commission
concluded that a political committee sponsored by a limited
partnership and a separate segregated fund of a corporation
owned by the partnership were affiliated. The Commission
also stated that a "political committee established by the
;partnership=" may solicit any individual who could lawfully
contribute and permitted such a committee to solicit from a
broad range of individuals and entities. The opinion thus
implied that the affiliated status of the two committees
would not restrict the class of personnel that could be
solicited for contributions to the committee sponsored by the
partnership. Later opinions indicate, however, that when a
separate segregated fund is established by a corporation
having affiliated partnerships and corporations, the class of
solicitable personnel within that mixed group of affiliates
is restricted to the categories specified in Commission
regulations at 11 CFR 114.5(g)(1). Advisory Opinions 1987-34
and 1983-48.
In Advisory Opinion 1983-48, for example, the
Commission considered a situation in which a corporation with
a separate segregated fund wished to solicit a broad range of
persons associated with partnerships owned or controlled by
the person who owned the corporation. In holding that the
partnerships were affiliates of the corporation, the
Commission also concluded that the executive and
administrative personnel of the affiliated partnerships "may
be solicited by the PAC to the same extent and under the same
conditions as executive or administrative personnel of ;the
corporation= are solicitable." The opinion thus excluded
other persons from the group that the requestor wished to
solicit. Therefore, to the extent that Advisory Opinion
1979-77 goes beyond the basic proposition that a partnership
and a corporation with common ownership may be affiliated,
and allows unlimited solicitation by a partnership-sponsored
committee irrespective of its affiliation with the separate
segregated fund of a corporation, Advisory Opinion 1979-77 is
hereby superseded.3/
You have posed two questions as to the use of the
partnership name Wagner & Brown, along with Insilco's name,
in the name of the separate segregated fund. Under the Act
and regulations, the name of any separate segregated fund
established by a corporation must include the full name of
the connected organization. 2 U.S.C. Sc432(e)(5); 11 CFR
102.14(c). The regulations clarify the limits of this
requirement by stating that a fund established by a
corporation which has a number of subsidiaries need not
include the name of each subsidiary in the fund and a fund
established by a subsidiary need not include the name of its
parent or another subsidiary. 11 CFR 102.14(c). Similarly,
although the name of Insilco Corporation must appear in the
name of the fund, the name of Wagner & Brown, an affiliate of
Insilco, need not appear. There is nothing in the Act or
regulations, however, to preclude the inclusion of an
affiliate's name, such as "Wagner & Brown," in the name of
the fund. It should be clear from the fund's Statement of
Organization (FEC Form 1), however, that the connected
organization of this fund is Insilco Corporation. Since
Wagner & Brown is not a connected organization of the fund,
its name should not be listed as such. See 11 CFR
102.2(a)(1)(ii) and (b)(2). Compare Advisory Opinion 1988-
14.
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. Sc437f.
Sincerely,
(signed)
Danny L. McDonald
Chairman for the
Federal Election Commission
Enclosures (AOs 1988-14, 1987-34, 1983-48, 1982-63, 1982-18,
1981-54, 1980-18, and 1979-77)
________________
3/ The Commission notes that its partial overruling of
Advisory Opinion 1979-77 does not limit the class of persons
who may be solicited for lawful contributions to a political
committee sponsored by a partnership if such a committee is
not affiliated with any separate segregated fund of a
corporation or labor organization. See, e.g., Advisory
Opinion 1982-63.