POLITICAL CONTRIBUTIONS AND LOBBYING EXPENDITURES
As a company whose regulated operations can be significantly impacted by public policies, American Water participates responsibly in the political process and makes reasonable political contributions consistent with all applicable laws and reporting requirements. American Water also holds memberships in a variety of industry, trade, and business associations, which enables the Company to understand the views of others and obtain feedback on its positions.
As part of the Company’s commitment to good governance principles and transparency, and in accordance with its Board-approved Political Contribution Policy, American Water Works Company, Inc. publicly discloses on its website information related to the Company’s Political Contributions and Third-Party Payments (each as defined in the Policy) made during a fiscal year within 180 days after the end of such fiscal year. The required disclosures include information regarding:
1. Direct Political Contributions by American Water or a subsidiary, which, as of December 31, 2018, must be made to or through the American Water Works Company, Inc. Employee Federal PAC (the "Employee Federal PAC") or a subsidiary or line-of-business PAC (a "Subsidiary PAC").
2. Political Contributions made by the Employee Federal PAC or any Subsidiary PAC.
3. Third-Party Payments to a tax-exempt organization or trade association during a fiscal year where the aggregate amount of all payments made by the Company or any subsidiary exceeds $50,000 in that fiscal year, and the Third-Party informs the Company in writing that a portion of any such payment was used for lobbying expenditures or political contributions that are considered non-deductible under Section 162(e)(1) of the Internal Revenue Code of 1986.
Political Contributions as defined for these purposes do not include amounts spent in connection with a core business function, such as a water or wastewater system acquisition, defense of a condemnation action filed against us, or other activities that impact or affect the operation of our business, unless made to support a political party, a candidate for elected office, or a candidate’s political campaign. Also, a payment to a tax-exempt organization or trade association (other than a PAC, a Section 527 organization, or similar entity) is not considered to be a Political Contribution, even if any portion of the payment was used for political purposes.
These disclosures have been reviewed and approved by the Company’s Board of Directors, upon the review and recommendation of the Nominating/Corporate Governance Committee, which is comprised solely of independent members of the Board of Directors. The Board of Directors will also annually review the effectiveness of the Political Contribution Policy.