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      FEC Record: Advisory opinions
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      AO 2016-02: PACs of LLC and one of its joint venture owners not affiliated

FEC Record: Advisory opinionsAO 2016-02: PACs of LLC and one of its joint venture owners not affiliatedMay 4, 2016 Enable Midstream Services, LLC ("Enable") asked whether a separate segregated fund (SSF) it plans to establish would be affiliated with the SSFs of its joint venture owners, CenterPoint Energy, Inc. ("CNP") and OGE Energy Corporation ("OGE"). The Commission concluded that Enable's SSF would not be affiliated with CNP's SSF, but could not approve a response by the required four affirmative votes on whether it would be affiliated with OGE's SSF. **Background**            Enable is a wholly-owned subsidiary of Enable Midstream Partners, LP ("Limited Partnership"). Enable and Limited Partnership are managed by Enable General Partnership, LLC ("General Partnership"). Enable, Limited Partnership and General Partnership were formed as part of a joint venture ("Joint Venture") between CNP, OGE and private investors "to own, operate and develop midstream natural gas and crude oil infrastructure assets." The Joint Venture is managed by the General Partnership through its board of directors ("Board") and executive officers. The Board consists of eight directors: the General Partnership's Chief Executive Officer, two directors representing CNP, two directors representing OGE, and three independent directors. Limited Partnership's formation involved the consolidation of approximately 1,900 employees from CNP, OGE and its various subsidiaries. Enable employs approximately 1,700 of those employees, who conduct the day-to-day operations of Limited Partnership and its subsidiaries.  An additional 164 seconded employees work for Enable but receive salaries from OGE and participate under OGE's benefit and retiree medical plans. Enable reimburses OGE for the employment-related expenses of these seconded employees. This temporary arrangement will end once the employees in this group either retire or leave their employment. Enable plans to establish an SSF that will be overseen by the officers of the Joint Venture, but operated and maintained separately from the SSFs of CNP and OGE. **Analysis**            Under the Federal Election Campaign Act and Commission regulations, political committees that are established, financed, maintained, or controlled by the same organization are affiliated. See 52 U.S.C. § 30116(a)(5); 11 CFR 100.5(g)(2), 110.3(a)(1). Certain organizations—including a corporation and its subsidiaries—are per se affiliated, which results in their SSFs being affiliated. See 11 CFR 100.5(g)(3)(i), 110.3(a)(2)(i). In cases where the relationship of one company to another does not constitute per se affiliation, the Commission will examine various circumstantial factors in the context of the overall relationship to determine whether organizations are affiliated. See 11 CFR 100.5(g)(4)(i)-(ii), 110.3(a)(3)(i)-(ii). Affiliated committees are treated as a single committee and share contribution limits; thus, contributions made by or to affiliated committees are considered to have been made by or to a single committee. 52 U.S.C. § 30116(a)(5); 11 CFR 100.5(g)(2), 110.3(a)(1). The Commission determined that Enable is not per se affiliated with either CNP or OGE because neither entity holds a majority interest in Enable. (The Commission has long considered a parent company's majority interest ownership of another organization indicative of per se affiliation.) Therefore, the Commission examined the ten circumstantial factors in the context of the overall relationship between the entities to determine affiliation. The Commission concluded that CNP does not own a controlling interest on the Board, has no hiring authority over Enable's employees, and does not have common employees with Enable, therefore these circumstantial factors weighed against finding affiliation. The Commission found five additional factors either neutral or inapplicable. The only remaining and relevant factor in the Commission's analysis was whether CNP has the authority to direct or participate in the governance of Enable. **Governance**            With governance, the Commission considers whether a sponsoring organization has the authority to direct or participate in governance of the sponsoring organization through provisions of constitutions, bylaws, contracts, or other rules, or through formal or informal practices or procedures. 11 CFR 100.5(g)(4)(ii)(B), 110.3(a)(3)(ii)(B). In this case, Enable is governed by the General Partnership's Board, which manages the day-to-day activities of Enable. Since CNP is entitled to appoint two directors to the eight-member Board, it participates in the governance of Enable. However, the Commission determined that because CNP has only one-quarter representation and control of the Board, it lacks the "authority to direct" the governance of Enable. While CNP's participation on Enable's governing Board weights in favor of finding affiliation, the Commission concluded that its weak representation and control of the Board does not cause this factor to weigh heavily. Given the "context of the overall relationship" between CNP and Enable, the Commission found there would be no affiliation between CNP's SSF and Enable's planned SSF. The Commission could not approve a response by the four affirmative votes on whether OGE's SSF would be affiliated with Enable's SSF. Date issued: April 29, 2016; Length: 10 pages **Resources:** AO 2016-02 [PDF]            Commission consideration of AO 2016-02 [mp3]


Read next: AO 2016-03: New election entitles candidates to separate contribution limit
 Related: Explore campaign finance data »


This information is not intended to replace the law or to change its meaning, nor does this information create or confer any rights for or on any person or bind the Federal Election Commission or the public. The reader is encouraged also to consult the Federal Election Campaign Act of 1971, as amended (52 U.S.C. 30101 et seq.), Commission regulations (Title 11 of the Code of Federal Regulations), Commission advisory opinions and applicable court decisions.


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