Advisory Opinion 2006-17: Berkeley Electric Cooperative, Inc. (BEC)

An electric cooperative may solicit its executive and administrative personnel and its members for contributions to its own separate segregated fund (SSF) and to the SSF of an affiliated organization. Furthermore, the cooperative may use proposed forms to solicit contributions from its executive and administrative personnel and its employees who are members, and it may use payroll deduction to collect and forward the contributions.

Background

The Berkeley Electric Cooperative, Inc. (BEC) is an incorporated electric distribution cooperative. BEC is composed of dues-paying members who agree to purchase electricity from the cooperative and comply with all other provisions of the organization's Articles of Incorporation and Bylaws. Many of BEC's employees, including executive and administrative personnel, are also members of BEC. The Berkeley Electric Cooperative, Inc. Political Action Committee (BEC PAC) is registered with the FEC as a federal PAC.

The National Rural Electric Cooperative Association (NRECA) is a non-profit corporation under the District of Columbia Cooperative Association Act. NRECA was established to provide informational services to rural electric cooperatives and others seeking the advancement and development of rural electrification in the United States. ACRE is NRECA's federally registered PAC. The Commission previously determined that NRECA is affiliated with its member cooperatives.(1) BEC is a member cooperative of NRECA. Thus, BEC is affiliated with NRECA.

BEC wishes to use a specific form to solicit contributions for BEC PAC and ACRE. The proposed form would offer three options for contributing:

• Recommended contribution amounts to be deducted from the employee's paycheck each pay period;
• A one-time contribution, determined by the contributor; or
• An election not to participate.

The form notes that the contribution amounts are merely suggestions and employees may elect to give more or less. Additionally, the form indicates the voluntary nature of contributions and the political purpose of BEC PAC.

• May BEC solicit its executive and administrative personnel, and its members, including members who are employees, for contributions to BEC PAC?
• May BEC solicit its executive and administrative personnel, and its members, including members who are employees, for contributions to ACRE?
• If BEC may solicit these persons for contributions, may it use proposed solicitation forms, and may it collect contributions from them by via payroll deduction plans?

Analysis

May BEC solicit its executive and administrative personnel and its members, including members who are employees, for contributions to BEC PAC?

Yes. Under the Act and Commission regulations, a membership organization or a cooperative may solicit contributions to its SSF from its members and its executive and administrative personnel. See 2 U.S.C. 441(b)(4)(C) and 11 CFR 114.7(a). Therefore, BEC may solicit its executive and administrative personnel, and its members, including employees who are members, for contributions to BEC PAC.

May BEC solicit its executive and administrative personnel and its members, including members who are employees, for contributions to ACRE?

Yes. In Advisory Opinion 1999-40, the Commission determined that, as affiliates of NRECA, distribution cooperatives are local units of NRECA and may act as collecting agents for contributions to NRECA's SSF, ACRE. Thus, BEC may solicit, collect and forward contributions from its restricted class for ACRE. Because BEC and NRECA are affiliated, their SSFs are considered one political committee and share contribution limitations. See 11 CFR 114.7(k)(1).

If BEC may solicit these persons for contributions, may it use proposed solicitation forms, and may it collect contributions from them by via payroll deduction plans?

Yes. Under the Act and Commission regulations, SSFs must inform employees of the political purpose of the fund and indicate that any employee or member solicited may refuse to contribute without reprisal. Additionally, it must be clear that any contribution guidelines are merely suggestions and the individual may contribute more or less or nothing and individuals will not be advantaged or disadvantaged in accord with the amount they contribute. See 11 CFR 114.5. All written solicitations for contributions to the organization's PAC that is addressed to an employee must contain statements that comply with these requirements. The Commission determined that the proposed form meets all FEC requirements in this regard.(2)

The Act and Commission regulations allow a corporation to enroll members of its restricted class in a payroll deduction plan that deducts contributions from payroll checks to make contributions to the SSF. See 11 CFR 114.2(f)(4). Therefore, BEC may use payroll deduction to collect and forward contributions to BEC PAC from solicitable class. Additionally, BEC may use payroll deductions to collect contributions to ACRE because it is collecting agent for ACRE. BEC may pay any and all costs incurred for soliciting and transmitting funds to ACRE since they are affiliated.(3)

AO 2006-17; Date issued: June 23, 2006; length: 8 pages

1) See Advisory Opinion 1999-40 for additional information.

2) 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. The Commission advised BEC to modify the form to clarify that BEC is only soliciting contributions from its solicitable class.

3) See Advisory Opinion 2000-15 for additional information regarding the ability of affiliated entities to act as collecting agents, using a payroll deduction plan.