UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

____________________________________ 

 ) 

UTILITY WORKERS UNION OF ) 

AMERICA, LOCAL 369, AFL-CIO, ) 

 ) Case Number: 09-cv-01022-JDB 

Plaintiff, ) 

 ) DEFENDANT FEDERAL ELECTION 

 v. ) COMMISSION’S SUPPLEMENTAL 

 ) MEMORANDUM OF LAW 

FEDERAL ELECTION COMMISSION, ) 

 ) 

 Defendant. ) 

____________________________________) 

DEFENDANT FEDERAL ELECTION COMMISSION’S 

SUPPLEMENTAL MEMORANDUM OF LAW 

 Pursuant to the Court’s January 14, 2010 Minute Order, Defendant Federal Election 

Commission (“Commission”) hereby submits this Supplemental Memorandum of Law 

addressing why the Commission’s Explanation and Justification for 11 C.F.R. § 114.5(j) has no 

bearing on the legal sufficiency of the complaint filed by Plaintiff Utility Workers Union of 

America, Local 369, AFL-CIO (“Local 369”), and accordingly, why such “interpretive 

guidance” has no effect on the resolution of the Commission’s motion to dismiss. 

ARGUMENT 

I. THE COMMISSION’S EXPLANATION AND JUSTIFICATION FOR SECTION 

114.5(j) DOES NOT APPLY HERE.

 The “interpretive guidance” referenced by the Court in its January 14 Minute Order is the 

Commission’s Explanation and Justification for Commission regulation 11 C.F.R. § 114.5(j), 

H.R. Doc. No. 95-44, 109 (Jan. 12, 1977). “Explanation and Justification” (“E&J”) is the term 

the Commission uses to describe the explanatory document it creates and submits to Congress 

whenever the Commission proposes a new regulation or an amendment to an existing regulation. 

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See Explanations and Justifications for FEC Regulations, available at http://www.fec.gov/law/ 

cfr/ej_main.shtml (last visited Jan. 25, 2010). The Commission issued its E&J for what is now 

section 114.5(j) to Congress in 1977. That regulation explains that notwithstanding restrictions 

on a separate segregated fund’s (“SSF”) ability to solicit contributions from people outside its 

restricted class of shareholders and executive employees, “[a] separate segregated fund may 

accept contributions from persons otherwise permitted by law to make contributions.” 11 C.F.R. 

§ 114.5(j). See also 11 C.F. R. §§ 114.5(g), 114.7, 114.8 (solicitation restrictions). The 

corresponding E&J adds that “[i]nforming persons of the right to accept such contributions is, 

however, a solicitation.” E&J, H.R. Doc. No. 95-44, 109 (Jan. 12, 1977). 

The regulation and accompanying E&J together serve two clear purposes. First, they 

clarify that the restrictions limiting whom SSFs may solicit for contributions do not equally limit 

from whom SSFs may accept contributions. Compare 11 C.F.R. 114.5(g), with 11 C.F.R. 

114.5(j); see also FEC Advisory Op. 1992-09, 1992 WL 105045, at *4 n.5 (“Commission 

regulations permit a separate segregated fund to accept an unsolicited contribution from a nonsolicitable person (assuming it is otherwise lawful) . . . .”) (citing 11 C.F.R. § 114.5(j)). Second, 

the E&J explains that an SSF may not circumvent solicitation restrictions through veiled 

communications that merely inform persons whom SSFs may not solicit of the SSF’s right to 

accept such unsolicited contributions. See, e.g., FEC Advisory Op. 1988-39, 1988 WL 170430, 

at *4 n.2 (“Although [an SSF] may accept such unsolicited contributions, the Commission has 

held that where a separate segregated fund informs an individual whom it may not solicit that the 

individual has the right to make unsolicited contributions to the fund, the act of informing that 

individual that the fund may accept his contribution is itself a solicitation.”) (citing, inter alia, 

E&J for 11 C.F.R. § 114.5(j)); FEC Advisory Op. 1988-38, 1988 WL 170429, at *6 n.3 (same); 

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FEC Advisory Op. 1984-55, at 2 n.2, available at http://saos.nictusa.com/aodocs/1984-55.pdf 

(last visited Jan. 25, 2010) (same). 

Local 369’s federal complaint alleges that the Commission’s dismissal of its 

administrative complaint was contrary to law because Local 369 disagrees with the 

Commission’s determination that Covanta’s Policy of Business Conduct (“Covanta Policy”) does 

not contain a solicitation for contributions to Covanta’s federal PAC. Because, as discussed 

below, the Covanta Policy — a 24-page “Policy of Business Conduct” distributed by Covanta to 

its employees that covers 35 different topics, one of which is Covanta’s policies regarding 

“Political Contributions/Lobbying” (see Compl. Attach. A, Ex. 22) — does not inform anyone of 

the SSF’s right to accept unsolicited contributions, the E&J invoked by Local 369 is inapposite 

and has no bearing on the Commission’s motion to dismiss. 

II. THE COVANTA POLICY DOES NOT INFORM ANYONE OF THE COVANTA 

SSF’S RIGHT TO ACCEPT UNSOLICTED CONTRIBUTIONS. 

Local 369’s reference to the E&J for section 114.5(j), like other allegations in the 

complaint, appears to have resulted from a misreading of the Covanta Policy language. (See 

Memorandum in Support of Commission’s Motion to Dismiss (“Mem.”) at 11.) While asserting 

that the Covanta Policy “informs all employees of the right of the Covanta PAC to accept 

contributions from undefined ‘eligible employees’” (Compl. ¶ 56), Local 369 never identifies 

any portion of the Policy that supposedly provides this information. Local 369 mischaracterizes 

the Policy’s “discuss[ion] [of] providing contributions to the federal PAC without explaining the 

scope of the term ‘eligible employees,’” as “offering a fairly open ‘invitation’ for employee 

contributions.” (Id. ¶ 48.) But the sentence referring to “eligible employees” does not say 

anything about accepting unsolicited contributions to the Covanta PAC, let alone “invite” such 

contributions. The paragraph containing the relevant sentence reads as follows: 

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Primarily, in order to make contributions to federal political 

candidates or committees, we have established a federal political 

action committee (or “PAC”). Contributions to the PAC by 

eligible employees are voluntary. Whether an employee 

contributes or not results in no favor, disfavor or reprisal from 

Covanta. The PAC will comply with all related federal and state 

laws. 

(Id. Attach. A, Ex. 22, at 11.) At most, this sentence begs the question about who is “eligible” to 

make voluntary contributions; it certainly does not inform any particular employees that they are 

eligible to contribute. (See Mem. at 10, 13-14 (discussing Commission’s repeated conclusion 

that corporate communications “may engender some inquiries” about SSFs, including “from 

readers who are not solicitable,” without being deemed solicitations) (citing FEC Advisory Op. 

2000-07, 2000 WL 725744, at *1, *3; FEC Advisory Op. 1982-65, available at 

http://saos.nictusa.com/aodocs/1982-65.pdf); Reply at 8 (same); see also Compl. Attach. B, at 4.) 

Rather, the sentence underscores Covanta’s efforts to comply with federal and state laws, inter 

alia, by highlighting the voluntary nature of any contributions to the PAC made by “eligible 

employees.” (Compl. Attach. A, Ex. 22, at 11.) 

The Commission has previously found similar language in a company communication to 

employees that merely explained the voluntary nature of any employee contributions to an SSF 

not to be a solicitation. See Advisory Op. 1983-38, at 3, available at http://saos.nictusa.com/ 

aodocs/1983-38.pdf (last visited Jan. 25, 2010). (See Mem. at 9, 10 (citing and discussing 

analogous advisory opinions — including 1983-38 — as a basis for the Commission’s dismissal 

of Local 369’s administrative complaint).) In Advisory Opinion 1983-38, the Commission 

approved a corporation’s announcement in a “company publication distributed to all employees” 

of the corporation’s establishment of an SSF. Advisory Op. 1983-38, at 1. In particular, the 

proposed communications “contain[ed] factual matters about the political fund and necessarily 

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impl[ied] that solicitations will occur” as well as “indicate[d] some of the legal requirements that 

apply to solicitations under 11 CFR 114.5(a), i.e. the voluntary nature and political purpose of 

the fund.” Id. at 3. In concluding that the communications were not solicitations, the 

Commission observed that the communications did not “praise employees for making 

contributions, encourage their participation, or facilitate the making of contributions. Moreover, 

they d[id] not inform the reader that unsolicited contributions from nonexecutive [company] 

employees or retirees w[ould] be accepted by [the SSF].” Id. 

Unlike the communications at issue in Advisory Opinion 1983-38, the Covanta Policy 

does not even “imply that solicitations [to Covanta’s SSF] will occur.” Compare id., with 

Compl. Attach. A, Ex. 22, at 11-12. To the extent it discusses contributions to Covanta’s SSF, 

the Covanta Policy merely “indicate[s] some of the legal requirements that apply” to SSF 

contributions generally, as well as “the voluntary nature and purpose of the fund.” Advisory Op. 

1983-38, at 3. Like the communications at issue in Advisory Opinion 1983-38, the Covanta 

Policy does not “praise employees for making contributions, encourage their participation, or 

facilitate the making of contributions.” Id. (See also Mem. at 10.) And, like the 

communications at issue in Advisory Opinion 1983-38, the Covanta Policy does not “inform the 

reader that unsolicited contributions from nonexecutive [company] employees or retirees will be 

accepted by [the SSF].” Advisory Op. 1983-38, at 3. The Commission’s E&J for section 

114.5(j) therefore has no bearing on whether the Covanta Policy contains a solicitation.1

 

1

 Local 369 also seems to suggest that Advisory Opinion 1991-03, 1991 WL 415550 — in 

which the Commission determined that a proposed communication was not a solicitation — 

supports its reliance on the E&J for 11 C.F.R. § 114.5(j), apparently because the Commission 

found a disclaimer included in the proposed communication there susceptible of “be[ing] 

interpreted as an invitation for contributions from non-executive or non-administrative 

employees.” (Compl. ¶ 48 (citing Advisory Op. 1991-03, at 4).) But that Advisory Opinion 

actually supports the Commission, not Local 369. (See Mem. at 9.) 

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III. INTERPRETING THE E&J AS LOCAL 369 SUGGESTS WOULD UNDERMINE 

PROVISIONS IN FECA AND COMMISSION REGULATIONS INTENDED TO 

ENSURE THAT CONTRIBUTIONS ARE MADE VOLUNTARILY. 

To the extent Local 369 is advocating an interpretation of the E&J for section 114.5(j) 

that would construe the Covanta Policy as a solicitation, such an interpretation presents the same 

policy concerns raised by Local 369’s proposed interpretations of 2 U.S.C. § 441b(b)(3) and 11 

C.F.R. § 114.5. (See Mem. at 14-15; Reply at 9.) As the Commission has explained, section 

114.5 of the Commission’s regulations was promulgated to “ensur[e] the voluntary nature of 

contributions to separate segregated funds.” FEC Advisory Op. 2003-06, 2003 WL 21210186, at 

*1; see also FEC Advisory Opinion 1996-18, 1996 WL 341161, at *3 n.3 (observing “the 

importance of ensuring that any contributions solicited for [an SSF] [are] voluntary and that no 

penalty attach[es] to any person who decides not to make a contribution”). (See Mem. at 14-15.) 

A determination that the Commission acted contrary to law in failing to classify as a solicitation 

a statement in a company policy of business conduct underscoring the voluntary nature of 

contributions to the company’s SSF would undermine the fundamental purpose of these statutory 

 

First, unlike the Covanta Policy, the communication at issue in Advisory Opinion 1991-

03 “intended to seek contributions from the [company’s] restricted class,” but included a 

disclaimer purporting to identify who “may contribute” to the company’s SSF that “erroneously 

characterize[d] the extent of the restricted class” by referring generally to all “employees of the 

company.” 1991 WL 415550, at *1, *3. The Covanta Policy does not purport to seek 

contributions at all, but rather to inform employees of Covanta’s policies of business conduct 

generally, including policies concerning “Political Contributions/Lobbying.” (See Compl. 

Attach. A, Ex. 22, at 11-12.) Moreover, the Covanta Policy neither identifies who “may 

contribute” to the Covanta SSF nor informs “eligible employees” or anyone else of the SSF’s 

right to accept unsolicited contributions. Rather, the Policy highlights the voluntary nature of 

contributions “by eligible employees” to the Covanta SSF. See Advisory Op. 1983-38, at 3. 

Second, the Commission nowhere indicated that a communication needs a disclaimer to 

avoid being deemed a solicitation. On the contrary, the Commission required that the disclaimer 

at issue in Advisory Opinion 1991-03 be amended only “[i]f [the SSF] intend[ed] to retain the 

disclaimer.” 1991 WL 415550, at *3. The Advisory Opinion clearly implied that an acceptable 

alternative was to omit the disclaimer altogether. 

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and regulatory provisions: protecting employees from unlawful pressure to contribute to their 

employers’ SSFs. 

CONCLUSION 

 For the foregoing reasons and those explained in the Commission’s prior memoranda, the 

Commission respectfully requests that this Court dismiss the Complaint with prejudice for failure 

to state a claim upon which relief can be granted. 

Respectfully submitted, 

Thomasenia P. Duncan (D.C. Bar No. 424222) 

General Counsel 

David Kolker (D.C. Bar No. 394558) 

Associate General Counsel 

Kevin Deeley 

Assistant General Counsel 

/s Erin Chlopak 

Erin Chlopak (D.C. Bar No. 496370) 

Attorney 

COUNSEL FOR DEFENDANT 

FEDERAL ELECTION COMMISSION 

999 E Street NW 

Washington, DC 20463 

Dated: January 26, 2010 (202) 694-1650 

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