OPINION NUMBER - 107

ADOPTED - 1987/11/20

SUBJECT - Campaign Financing; Separate Segregated Political Funds (PACS); Multi-state PACs.

REQUESTED BY: Gerald D. Quick, Legislation Manager, Peoples Natural Gas.

QUESTION: (1) What restrictions on solicitations are placed on multi-state PACs? (2) What are the reporting requirements of multi-state PACs?

CONCLUSION

See Analysis

FACTS

You have stated in your letter dated October 21, 1987 and in conversations with the Commission staff that Peoples Natural Gas, head quartered in Omaha, is in the process of establishing a political action committee. Peoples operates in the states of Nebraska, Iowa, Minnesota, Kansas and Colorado. It is your intent to solicit contributions to the PAC from Peoples' employees working in these states and to use the funds in support of candidates for state office and state ballot issues in the five states in which you operate. You are considering placing a statement in the solicitation which indicates that funds received and not designated for a specific use would be used to support candidates for state office and state ballot issues in any of these five states.

ANALYSIS

The term "PAC" is not found in the Nebraska Political Accountability and Disclosure Act. Instead the term Separate Segregated Political Fund is used. Section 49-1469(2)(a) states:

A corporation, labor organization, or industry, trade or professional association may not receive contributions unless it establishes and administers a separate segregated political fund which may be utilized only for the purpose of receiving such contributions and making expenditures in the manner set forth in this subsection.

The provisions of Section 49-1469(2)(c) limit contributions to and expenditures from such separate segregated political funds to money or things of ascertainable value obtained through the voluntary contributions of the employees, officers, directors, stockholders, or members of the corporation (including a non-profit corporation, labor organization, or industry, trade or professional association, and the affiliates thereof) under which such fund was established. Insofar as a corporation is concerned, the expenditures made by a separate segregated political fund are limited to candidates and committees and independent expenditures. When one reads the definition of "candidate" as found in Section 49-1409 in conjunction with the definitions of "election" as found in Section 49-1416 and "elective office" as found in Section 49-1417 one must reach the conclusion that the only candidate to whom a separate segregated political fund may make a contribution is one who is participating in an election held within the state of Nebraska excluding federal offices. The term "committee" as found in Section 49-1413 must also be read in conjunction with the definitions of "election" and "elective office". Again, one must come to the conclusion that the committee referred to is a Nebraska committee. Therefore, a separate segregated political fund may use those funds only to support or oppose Nebraska candidates or committees or to make independent expenditures on behalf of Nebraska candidates or committees. A Nebraska separate segregated political fund may not make expenditures on behalf of, or in opposition to, federal candidates or candidates in states other than Nebraska. It may not make expenditures to influence the outcome of ballot questions in other states. Therefore, the proposed actions of Peoples Natural Gas would be contrary to the provisions of the Nebraska Political Accountability and Disclosure Act. Peoples Natural Gas, however, is not without a method to carry out its program.

In advisory opinion #70 we stated ". . . Nebraska law does not prohibit a Nebraska PAC from acting as an intermediary or collection agent for a federal PAC". Consistent with this decision, we find that Nebraska law does not prohibit a Nebraska PAC from acting as an intermediary or collection agent for a PAC established under the laws of another state. Thus, Peoples Natural Gas would be permitted to carry out its program if its Nebraska separate segregated political fund acted as an intermediary or collection agent for PACs established by Peoples in the other states in which it functions. This ability is subject to restriction.

"It is the intent of the contributor that controls what his contribution is for". Advisory Opinion 70 referring to Federal Election Commission Advisory Opinion 1984-31. If a Nebraska separate segregated political fund is to be used as an intermediary or a collection agent for a federal PAC or a PAC established by the laws of another state, the contributor must designate how he or she wishes those funds used or the solicitation of funds must indicate how the funds will be used.

In addition, the funds must be used as set forth in the designation or solicitation. The reporting requirements for a separate segregated political fund are found generally in Section 49-1445 through Section 49-1479.01. Explanations of these various sections may be found in the publications and advisory opinions of the Commission. Two points, however, need to be clarified.

The first point is that Section 49-1469(2)(e) states that a separate segregated political fund is considered an independent committee. A review of Section 49-1427 defining "independent committee" and Section 49-1413 defining "committee" indicates that a committee is formed when two or more individuals receive or make expenditures of over $2,000 in a calendar year for the purpose of attempting to influence voters on the matter of a candidate's election or the matter of the qualification or passage of a ballot question. Therefore, a separate segregated political fund is not required to organize until it has surpassed that $2,000 level in a calendar year.

The second point is that a Nebraska separate segregated political fund which acts as an intermediary or collecting agent for an out of state fund must report those funds being received and forwarded. That is, it must provide the name and address of the out of state fund for whom or for which the Nebraska fund acted as intermediary. The Nebraska fund does not need to report the manner in which the out of state fund made expenditures.