OPINION NUMBER - 126

ADOPTED - 1990/08/03

SUBJECT - Campaign Financing/PACs

REQUESTED BY: Karen Gehle, Executive Vice President, Nebraska Realtors Association

QUESTION: 1) May an Issues Mobilization Committee function in the described manner without being a separate segregated political fund or PAC?

2) May an industry trade or professional association sponsor more than one Nebraska state separate segregated political fund or PAC?

3) May an Issues Mobilization Committee of an industry, trade or professional association accept and disburse funds as set forth in six specific situations?

CONCLUSION

As to question #1 - see analysis. As to question #2 - no. As to question #3 - see analysis.

FACTS

You state that the National Realtors Association has established an Issues Mobilization Committee (IMC). This IMC will provide funds to local chapters of the Realtors Association that have established their own IMCs according to national guidelines. The fund will be used in connection with local issues that may have a national impact.

The Nebraska Realtors Association has established its own IMC. It is proposed that this IMC would solicit funds from members of the Nebraska Realtors Association. These funds would be used, in accordance with national guidelines, for the following purposes:

a) Ballot measure campaigns;

b) Grass roots lobbying activities;

c) Community educational forums on specific issues;

d) Contributions to or with other grass roots lobbying organizations with respect to common issues;

e) Issue advocacy, including contract employment of a professional issues advocate;

f) Data collections to assist the Nebraska Realtors Association with the development of a lobbying strategy.

The Nebraska Realtors IMC would not be using its funds to support or oppose candidates.

ANALYSIS

Question #1 - We first point out that the term PAC does not appear in the Nebraska Political Accountability and Disclosure Act. For ease of reference in this opinion, however, we use the term PAC and separate segregated political fund interchangably.

Section 49-1469(2)(a) states that an industry, trade or professional association may not receive contributions unless it establishes and administers a separate segregated political fund. The term "contribution" has a specific meaning which is found in section 49-1415. That section generally defines a contribution as giving something of value (including money) for the purpose of influencing the nomination or election of a candidate, or for the purpose of influencing the qualification, passage or defeat of a ballot question. While the proposed Nebraska Realtors IMC would not be using its fund to support or oppose candidates, it does appear that it is proposing to use IMC funds in connection with ballot question campaigns. Therefore, the funds coming into the IMC qualify as contributions and may only be received by an industry, trade or professional association through a separate segregated political fund or PAC. However, the purposes for which the funds of a PAC established by an industry, trade, or professional association may be used are limited. These purposes are set forth in section 49-1469(2) (c) as being:

1) Expenditures to candidates;

2) Expenditures to committees (including ballot question committees);

3) Independent expenditures (including those made in connection with ballot questions)

4) Disbursements to committees in states other than Nebraska and to federal candidates; and

5) Administrative expenses.

Since some of the proposed uses of the IMC fund would also be permissible PAC expenditures and some of the proposed uses of the IMC fund would not be permissible PAC expenditures, we examine each proposed use individually.

A) Ballot Measure Campaign - Clearly a PAC may make expenditures to support or oppose the qualification or passage of a ballot question. An IMC of a industry, trade or professional association may not solicit funds from its member for the purpose of supporting or opposing the qualifications or passage of a ballot question unless the IMC is also a separate segregated political fund or PAC.

B) Grass Roots Lobbying Activities - Whether a PAC may make expenditures for grass roots lobbying activities depends upon what is meant by the term grass roots lobbying activities. If the term is used in the sense of making expenditures to convince the citizens of the state that they ought to contact their state senators regarding a matter pending before the legislature or contacting the executive branch regarding legislation pending before the branch, PAC funds may not be used. Lobbying activities do not fall within any of these categories or permissible PAC fund use found in section 49-1469(2)(c). If the term grass roots lobbying is meant in the sense of convincing citizens that they ought to sign, or ought not to sign a petition to place a matter on the ballot or ought to vote for or against a ballot question, the use of PAC funds is permissible. This is because it would be an expenditure in assistance of, or in opposition to the qualification, passage, or defeat of a ballot question. See section 49-1419(1). An industry, trade or professional association soliciting funds for the latter purpose must do so through a separate segregated political fund or PAC.

C) Community Educational Forums on Specific Issues - Generally, PAC funds could not be used for this purpose. However, if these community educational forums were in assistance of the qualification, passage or defeat of a ballot question, PAC funds could be used.

D) Contributions to or With Other Grass Roots Lobbying Organizations With Respect to a Common Issue - PAC funds could not be used for this purpose unless the organization receiving the contribution was a ballot question committee.

E) Issue Advocacy, Including Contract Employment of a Professional Issues Advocate - Generally, PAC funds could not be used for this purpose. However, if this issue advocacy or contract employment was in assistance of the qualification, passage or defeat of a ballot questions, PAC funds could be used.

F) Data Collection to Assist the Nebraska Realtors Association With the Development of a Lobbying Strategy - As stated, PAC funds may not be used for lobbying purposes.

The key problem with an IMC functioning as described is that the solicitation of contributions by an industry, trade or professional association for a ballot measure may only be made through a PAC. However, expenditures for things such as lobbying activities may not be paid for out of PAC funds. Possibly, a solution to this problem is for the Nebraska Realtors to establish an IMC which would not use its funds for the purpose of influencing the nomination or election of a candidate, or for influencing the qualification, passage, or defeat of a ballot question. It would, however, be able to use its fund for other activities. An IMC organized for these other activities would not be a PAC. Essentially, the described purposes or functions of the IMC include some which must be done through a PAC as well as some which may not be done through a PAC.

QUESTION #2 - The second question posed by the Nebraska Realtors Association is whether an industry, trade or professional association may have more than one Nebraska state separate segregated political fund or PAC. It is our position that only one separate segregated political fund or PAC is permissible.

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 shall be utilized only in the manner set forth in this subsection (emphasis added)

The article "a" appearing before the phrase "separate segregated political fund" is one that denotes a singular noun. That is, it refers to a single separate segregated political fund. On the face of the statue it appears that section 49-1469(2)(a) is providing for one separate segregated political fund per corporation, labor organization, or industry, trade, or professional association. We concede that the argument could be made that in statutory language the singular is often used in generic sense and not meant to be limiting. That is, the generic singular includes the plural. However, if the generic singular were being employed in section 49-1469(2)(a) one would expect that the generic singular would be consistently used throughout the sentence. It is not. The statute refers to contributions rather than the singular contribution. Since the singular is not used throughout the sentence, one may conclude that within the sentence singular is meant to apply only to that which is truly singular. Thus, only one separate segregated political fund is contemplated for each corporation, labor organization, or industry, trade or professional association.

This interpretation is consistent with other provision of the Nebraska Accountability and Disclosure Act. For example, section 49-1446(2) states that each committee shall designate one account in a financial institution as an official depository for the purpose of depositing all contributions. A second depository is permissible only for the purpose of depositing funds for immediate transfer to the official depository. The single official depository requirement helps to provide an easily followed auditing trail which ultimately helps to assure that funds received and funds expended by a committee, including a separate segregated political fund, are received and expended in accordance with law. Multiple PACs would muddy the auditing trail and circumvent the purpose of section 49-1466(2).

Finally, a multiplicity of PACs established by a single organization works to defeat one of the goals of the Nebraska Political Accountability and Disclosure Act. Ideally, the public should be able to determine the sources of contributions to either candidates or ballot question committees. This becomes more difficult if contributions to candidates and ballot question committees are being made under a number of names and from a number of different financial accounts though ultimately from the same source.

QUESTION #3 - We not examine how the IMC or the association may receive or disburse funds in six specific situations.

SITUATION A - May the IMC make a contribution to the Nebraska Realtors Association PAC?

Contributions to a separate segregated political fund or PAC of an industry, trade or professional association are limited to the voluntary contributions of the employees, officers, directors, stockholders, or members of the sponsoring association. The IMC does not fall into any of these categories. Even though the source of the IMC funds may be exclusively from the members of the association, the IMC contribution is still not permissible.

SITUATION B - May the IMC accept contributions from another PAC?

An IMC which is not a PAC and not soliciting funds to influence the nomination or election of a candidate or the qualification, passage or defeat of a ballot question may theoretically accept funds from any source. However, a separate segregated political fund or PAC organized under Nebraska law could not make such a contribution because it is not among the permissible uses for PAC funds set forth in section 49-1469(2)(c) which are listed in response to question #1. Whether a federal PAC or PAC organized under the laws of another state could make such a contribution is dependent upon federal law or the law of the state under which the PAC was organized.

SITUATION C - May the IMC accept contributions from the National Association of Realtors?

If IMC is not functioning for the purpose of influencing the nomination or election of a candidate or the qualification, passage or defeat of a ballot question, there is nothing in the Nebraska Political Accountability and Disclosure Act which would restrict the IMC from accepting funds from the National Association of Realtors. However, an IMC may not accept contributions from the National Association of Realtors for the purpose of influencing elections or ballot questions. The IMC, according to the description given, is a part of the Nebraska Realtors Association and an association may not receive contributions to influence elections or ballot questions except through a separate segregated political fund or PAC. See Section 49-1469(2)(a).

SITUATION D - May the Nebraska Realtors Association expend its funds to influence the qualification, passage or defeat of a ballot question?

The Nebraska Realtors Association may make expenditures from its general fund (not its PAC or separate segregated political fund) for the purpose of influencing the nomination or election of a candidate of the qualification, passage or defeat or a ballot question. See section 49-1469(1). That same section sets forth a reporting requirement for an industry, trade or professional association using its general fund in that manner.

SITUATION E - May the IMC use its funds to influence the qualification, passage or defeat of ballot question?

An IMC which is not a PAC could use its funds for this purpose because it is a part of the Nebraska Realtors Association. The Nebraska Realtors Association may not solicit funds to influence the qualification, passage or defeat of a ballot question except through a separate segregated political fund or PAC.

SITUATION F - May the currently established PAC of the Nebraska Realtors Association make a contribution to another PAC?

As stated in response to question #1, the purpose for which PAC funds may be used are limited. See section 49-1469(2)(c). A PAC may make an expenditure to a committee. PACs or separate segregated political funds are committees under Nebraska law. Therefore, on the face of it, it would appear that funds could be transferred from PAC to PAC. However, just as the uses of PAC funds are limited, the sources from which PAC funds may be received are limited. A PAC may receive contributions only from employees, officers, directors, stockholders, or members of the sponsoring organization. It is unlikely that the contributing PAC would fall into any of these categories.

OTHER CONSIDERATIONS: In response to question #1 of this opinion, we refer to section 49-1469(2)(c) which states in part that the administrative expenses of the separate segregated political fund or PAC of a industry, trade or professional association may be paid out of PAC funds. However, the same section prohibits the separate segregated political fund or PAC of a corporation or labor organization from paying its own administrative expenses. We note that Nebraska Realtors Association is both an association and a corporation, its corporate status being a public record on file with the office of the Secretary of State. It falls into both the corporate category and the association category and the question is thus raised whether the PAC or industry, trade or professional association which association is also a corporation may pay its own administrative expenses. We believe that it may. Prior to the enactment of LB214 in 1983 industry, trade, and professional associations had the same restrictions as corporations and labor organizations against using PAC funds for administrative expenses. During the floor debate on LB214 its sponsor, Senator Hefner stated:

. . . now LB214 allows the PACs established by an industry, trade or professional association, but not any corporation or labor organization to pay their own administrative costs using funds from their independent committee's separate segregated political funds. As has been the case, the cost of an administrator or a part-time administrator working with these groups would have to receive their compensation from the organization itself. This would allow them to charge this portion of their expenses to the PAC that has been established. (floor debate on LB214, 3-25-83, page 2213, emphasis added)

The same purpose is also found in the statement of intent submitted to the Miscellaneous Subjects Committee during the initial hearing on LB214.

It appears to have been the intent of the legislature to solve a specific problem. That is, the inability of industry, trade or professional associations administering a PAC to pay the cost of an administrator out of the PAC funds. This problem would exist whether or not the association was a corporate or other entity. In addition, the language "but not any corporation" could be interpreted as distinguishing corporations which are industry, trade or professional associations from any other corporation. Based upon the foregoing, we believe that section 49-1469(2)(c) permits the PAC of an industry, trade or professional association to pay its own administrative expenses regardless of its corporate form.

To the extent that the Nebraska Realtors Association wishes to solicit funds for the purpose of engaging in activities which are not in assistance of, or in opposition to, the nomination or election of a candidate, or the qualification, passage or defeat of a ballot question it may use its IMC and this IMC would not be a separate segregated political fund. To the extent that it does wish to engage in activities which are in assistance of, or opposition to, the nomination of election of a candidate, or the qualification, passage or defeat of a ballot question, it must use the separate segregated political fund which it has already established.