AGENDA DOCUMENT NO. 16-32-A 

FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

OFFICE OF COMMISSIONER ANN M. RAVEL 

To: The Commission 

From: Ann M. Ravel, Commissioner 

Date: August 9, 2016 

RE: Proposal to Rescind Advisory Opinion 2006-15 (TransCanada) 

ZOI6AUG-9 P:~ 1:01 

AGENDA ITEM 

For Meeting of l6-lb-l0 

For the reasons discussed in the attached memorandum, I move to formally rescind 

Advisory Opinion 2006-15 (TransCanada) and the parts of other advisory opinions that purported 

to permit Domestic subsidiaries of foreign corporations to make contributions or donations, either 

directly or through separate segregated funds, in connection with federal, state, and local 

elections. 
FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

OFFICE OF COMMISSIONER ANN M. RAVEL 

MEMORANDUM 

To: The Commission 

From: Ann M. Ravel, Commissioner 

Date: August 9, 2016 

RE: Proposal to Rescind Advisory Opinion 2006-15 (Trans Canada) 

Ten years ago, the Commission determined in Advisory Opinion 2006-15 (TransCanada) 

that two Domestic subsidiaries of a foreign national corporation could make "corporate donations 

and disbursements" in state and local elections in the United States. Id. at 2-3 (citing 

Contribution Limitations and Prohibitions, Final Rules, 67 Fed. Reg. 69928, at 69943 (Nov. 19, 

2002)). The Commission relied upon this determination in approving additional advisory opinion 

requests, including approving a request for a Domestic subsidiary of a foreign national 

corporation to establish and administer a separate segregated fund ("SSF"). See, e.g., Advisory 

Opinion 2009-14 (Mercedes-Benz USA/Sterling). 

Since the Commission reached these conclusions, however, campaign finance law has 

undergone fundamental change. The Citizens United decision and its progeny in the lower federal 

courts have transformed the American campaign finance system by opening up new avenues for 

outside and corporate spending in our elections. In my view, these changes have significantly 

undermined the factual and legal assumptions underlying Advisory Opinion 2006-15 

(TransCanada); thus, the opinion no longer reflects good law. 

Consequently, we need to clarify the status of this advisory opinion and other advisory 

opinions that similarly purported to permit Domestic subsidiaries of foreign corporations to make 

contributions or donations, either directly or through separate segregated funds, in connection 

with federal, state, and local elections to provide guidance to the regulated community. 

The Act prohibits campaign spending "directly or indirectly" by foreign nationals. See 52 

U.S.C. § 30121(a)(l); Bluman v. Fed. Election Comm 'n, 132 S.Ct. 1087 (2012) (mem.), aff'g 800 

F. Supp. 2d 281 (D.D.C. 2011). This includes a prohibition on making any expenditures, 

contributions, or disbursements in connection with elections in the United States. The 

Commission's regulations also prohibit foreign nationals from directly or indirectly participating 

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FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

OFFICE OF COMMISSIONER ANN M. RAVEL 

in decisions involving election-related activities, or in the decision-making process of any 

political committee. 11 C.F.R. §110.20. 

Reaching the conclusion that the two Domestic subsidiaries of foreign corporations were 

permitted to make "corporate donations and disbursements," and similarly that Domestic 

subsidiaries may establish and administer SSFs, the Commission assumed that "(1) the donations 

and disbursements derive entirely from funds generated by the [s]ubsidiaries' U.S. operations; 

and (2) all decisions concerning the donations and disbursements will be made by individuals 

who are U.S. citizens or permanent residents, except for setting overall budget amounts.'' 

Advisory Opinion 2006-15 (TransCanada) at 2; see also Advisory Opinion 2009-14 (MercedesBenz USA/Sterling) at 3-4. 

The Commission also opined that Congress' expansion and strengthening of the foreign 

nationals ban in the Bipartisan Campaign Reform Act of 2002 ("BCRA") "should not be 

interpreted to prohibit U.S. subsidiaries of foreign corporations from making donations in 

connection with State and local elections, or from making contributions in connections with 

Federal elections from a separate segregated fund, or both." Advisory Opinion 2006-15 

(TransCanada) at 3 (citing Contribution Limitations and Prohibitions, Final Rules, 67 Fed. Reg. 

69928, at 69943 (Nov. 19, 2002)). The Commission noted that when BCRA added the phrase 

"indirectly" to "[i]t shall be unlawful for a foreign national, directly or indirectly, to make" a 

contribution, expenditure, or disbursement in elections in the United States, 52 U.S.C. § 

30121(1)(A)-(C), Domestic subsidiaries of foreign corporations were not prohibited from 

participating in state and local elections. Advisory Opinion 2006-15 (TransCanada) at 3; see also 

Advisory Opinion 2009-14 (Mercedes-Benz USA/Sterling) at 3 (finding that Congress "did not 

prohibit 'the participation of such subsidiaries in elections in the United States ... through 

separate segregated funds"'). 

The Citizens United decision and its progeny in the lower federal courts have transformed 

the American campaign finance system. As Justice Stevens noted, "Unlike voters in U.S. 

elections, corporations may be foreign controlled," and the majority's decision in Citizens United 

"would appear to afford the same protection to multinational corporations controlled by 

foreigners as to individual Americans." Citizens United v. Fed. Election Comm 'n, 558 U.S. 310, 

424, 465 (2010) (Stevens, J., dissenting). Therefore, our campaign finance system is vulnerable 

to influence from foreign nationals and foreign corporations through Domestic subsidiaries and 

affiliates in ways unimaginable a decade ago. 

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FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

OFFICE OF COMMISSIONER ANN M. RAVEL 

This is not a hypothetical concern. On August 3, 2016, The Intercept reported that a 

Domestic subsidiary of a foreign corporation wholly-owned by a Chinese couple, which included 

the couple on the board of directors of the Domestic subsidiary, and which required the board's 

sign-off before making political contributions, made a contribution of over $1 million to a Super 

PAC supporting a Republican presidential candidate. See Jon Schwartz & Lee Fang, The Citizens 

United Playbook: How a Top GOP Lawyer Guided a Chinese-Owned Company into US. 

Presidential Politics, THE INTERCEPT (Aug. 3, 2016, 1:10PM), 

https://theintercept.com/2016/08/03/gop-lawyer-chinese-owned-company-us-presidentialpolitics/. 

Foreign nationals have also allegedly used sham Domestic corporations to funnel foreign 

money into our elections. See Compl. at 1-3, United States v. Singh et. a/., No. 14-NJ-0201 (S.D. 

Cal. Jan. 21, 2014 ), available at https:/ /www .documentcloud.org/documents/1 008176-

complaint.html; United States v. Matsura, 129 F. Supp. 3d 975, 977 (S.D. Cal. 2015) (Noting that 

the superseding indictment alleged that a foreign national "illegally and surreptitiously funneled 

his money into various political campaigns and committees, including those of three San Diego 

mayoral candidates and a committee supporting federal candidates," totaling "approximately 

$600,000 in such illegal donations and lists multiple occasions in which [the foreign national] was 

not identified as the true source of campaign donations or the donation was concealed."). 

Given the significant developments in law and practice concerning the ability of foreign 

national corporations to exert- at minimum- "indirect[]" authority over the contributions and 

expenditures of their Domestic subsidiaries, there is sufficient doubt that the "assumptions" that 

were "material to [the] conclusion[s]" presented in Advisory Opinion 2006-15 (TransCanada) 

remain valid. Advisory Opinion 2006-15 (TransCanada) at 6. 

Accordingly, to clarify the current state of the law regarding the Act's prohibition of 

spending by foreign nationals, I recommend the Commission formally rescind Advisory Opinion 

2006-15 (TransCanada) and the parts of other advisory opinions that purported to permit 

Domestic subsidiaries of foreign corporations to make contributions or donations, either directly 

or through separate segregated funds, in connection with federal, state, and local elections. 

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