AO 2009-13: Political committee status of consultants serving LLCs who make independent expenditures
A communications consulting company established as a Limited Liability Company (LLC) may serve as a commercial vendor to a single member, natural-person LLC that makes independent expenditures concerning federal elections or candidates without triggering political committee status. This consulting company may also serve as a commercial vendor to two or more of these LLCs without triggering political status assuming that it does not facilitate communications between the LLCs and does not convey information from one LLC to another.
Background
Black Rock Group (BRG) is an LLC that assists its clients, including CEOs, elected officials and Fortune 500 companies, in building public policy campaigns through communication, “earned media” and grassroots messaging. BRG intends to extend these strategic communication and general consulting services to single-member, naturalperson LLCs established for the sole purpose of making independent expenditures that expressly advocate the election or defeat of one or more federal candidates.
The LLCs that BRG plans to work with will all be established for the sole purpose of making independent expenditures supporting or opposing federal candidates. BRG will only work with an LLC if it consists of a sole member and manager, is treated as a disregarded entity (not as a corporation) for federal income tax purposes, receives all capital contributions solely from the personal funds of its only member, accepts no donations from any other individual or entity and engages in no for-profit business activities.
Each single-member, natural person LLC will spend more than $1,000 per calendar year on independent expenditures expressly advocating the election or defeat of one or more federal candidates via television, radio, direct mail, phone banks and print ads. In no case will any communication be funded by more than one LLC. However, in some cases more than one LLC may make independent expenditures for or against the same federal candidate. Neither BRG nor its LLC clients nor any other vendor providing services to each LLC will coordinate any communications with any federal candidate or political party committee. The same BRG personnel will service all of the LLCs, and BRG will manage other consultants such as pollsters, media production and placement companies and other communication vendors who will provide services to each LLC. BRG will not have firewalls preventing BRG personnel advising one LLC from discussing that client’s private plans and activities with staff advising another LLC. BRG anticipates facilitating certain communications between LLCs by, for example, scheduling meetings or conveying messages between them.
Analysis
Treatment of LLC as an individual
Under the Federal Election Campaign Act (the Act) and Commission regulations, contributions and independent expenditures made by a single-member, natural-person LLC are treated as if they were made by an individual. 2 U.S.C. §431(8) and (9); 11 CFR 110.1(g). In AO 2009-02, the Commission determined that independent expenditures made by an LLC with a sole natural person member should be treated as if they were made by that member. Because the LLC is a third party and is not the requestor of this advisory opinion, the Commission could not state in advance that the LLC at issue would have the same kind of unity with the sole member of the LLC demonstrated in AO 2009-02. However, for purposes of this advisory opinion, the Commission assumed that the LLC to which BRG is providing its services will be similar in all material respects to the single-member LLC addressed in AO 2009-02. Therefore, the single-member, natural-person LLCs addressed by this opinion are treated as individuals, not as “political committees” under the Act.
Political committee status of BRG
This advisory opinion addresses two “political committee” status issues: first, the possible status of BRG as a political committee and, second, the status of BRG and one single-member, natural-person LLC as a “group of persons” constituting a “political committee.” The Act and Commission regulations define “political committee” as “any committee, club, association, or other group of persons which receives contributions aggregating in excess of $1,000 during a calendar year or which makes expenditures aggregating in excess of $1,000 during a calendar year.” 2 U.S.C. §431(4) (A); 11 CFR 100.5(a). The Supreme Court limited the scope of the term to organizations that are controlled by a federal candidate or whose major purpose is the nomination or election of a candidate. Buckley v. Valeo, 424 U.S. 1, 79 (1976); FEC v. Massachusetts Citizens for Life, Inc., 479 U.S. 238, 262 (1986).
The request, as well as the information available on BRG’s website, indicates that BRG is organized and operated for commercial purposes, and not for purposes of nominating or electing a candidate. BRG is a vendor of communication consulting services to a range of clients. BRG indicates that it has not in the past advocated the election of any federal candidate, supported any political party or stated any political purpose, and does not plan to do so in the future. BRG is neither owned nor controlled by any federal candidate. Therefore, the Commission concludes that BRG is not itself a political committee.
BRG and one single-member, natural-person LLC as a group of persons
Although BRG will advise its LLC client on message development and the communication of its views on federal candidates, it offers similar consulting services to its non-political clients by advising them on media strategy, message campaigning and building public policy campaigns. The LLC will retain ultimate control over the timing, content, method and candidate referenced in each communication constituting an independent expenditure, and BRG itself will not pay for any communications. The relationship between BRG and its LLC client is consistent with that of a commercial vendor, defined by Commission regulations as “any persons providing goods or services to a candidate or political committee whose usual and normal business involves the sale, rental, lease or provision of those goods or services.” 11 CFR 116.1(c). The consulting services BRG will provide to its LLC client are consistent with its usual and normal business practice; thus, BRG and its LLC client will not constitute a “group of persons.”
Political committee status of BRG and multiple LLCs
Assuming that none of the LLCs directly communicate with one another and that BRG does not facilitate communication between them, the Commission agreed that there was nothing to suggest that either the LLCs or the LLCs together with BRG would be a political committee. The Commission has previously concluded that individuals using a common commercial vendor did not constitute a “group of persons” and thus were not a political committee. See AO 2008-10. In that advisory opinion, the requestor represented that it did not facilitate communications or arrangements among its clients. If BRG does not facilitate communication between any of its LLC clients or otherwise convey any information about one LLC to any other LLC, BRG will simply be establishing a separate commercial relationship with each individual LLC, and the LLCs or the LLC together with BRG will not become a political committee. The Commission did not address whether any agreements or collaboration between the LLCs that does not involve BRG would result in the creation of a political committee.¹
AO 2009-13: Date issued: September 28, 2009; Length: 7 pages
¹“Reporting committees” means political party committees, political committees authorized by candidates (i.e., candidate committees) and leadership PACs. 11 CFR 104.22(a)(1).