FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

MEMORANDUM 

TO: Patricia C. Orrock 

Chief Compliance Officer 

Dayna C. Brown 

Acting Assistant Staff Director 

Audit Division 

FROM: Neven F. Stipanovic 

Associate General Counsel 

Policy Division 

Lorenzo Holloway 

Assistant General Counsel 

Compliance Advice 

Margaret J. Forman 

Attorney 

March 17, 2021

SUBJECT: Interim Audit Report on the Republican Party of Minnesota – Federal 

(LRA 1108) 

The Office of the General Counsel has reviewed the proposed Interim Audit Report 

(“Proposed IAR”) of the Republican Party of Minnesota - Federal (“RPOMF”). The Proposed 

IAR contains six findings: Recordkeeping for Employees (Finding 1), Recordkeeping for 

Communications (Finding 2), Reporting of Apparent Independent Expenditures (Finding 3), 

Disclosure of Transfers and Allocation Ratios (Finding 4), Excessive Coordinated Party 

Expenditures (Finding 5), and Disclosure of Loans and Loan Repayments (Finding 6).1 We 

concur with the findings, except as provided in our comments on Findings 1 and 3. If you have 

any questions, please contact Margaret J. Forman, the attorney assigned to this audit. 

1 We recommend that the Commission consider this document in Executive Session because the 

Commission may eventually decide to pursue an investigation of matters contained in the proposed IAR. 

11 C.F.R. §§ 2.4(a), (b)(6). 
 

 

 

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I. RECORDKEEPING FOR EMPLOYEES (FINDING 1). 

The Proposed IAR found that RPOMF failed to maintain any monthly employee payroll 

logs for $297,9452 in payroll for 2017 and 2018, as required, to document the percentage of time 

that each employee spends in connection with a federal election. 11 C.F.R. § 106.7(d). This 

amount includes payroll totaling $290,060 for employees reported on Schedule H4 

(Disbursements for Allocated Federal and Non-Federal Activity) and paid with an allocation of 

federal and non-federal funds, and payroll expenses totaling $7,885 for employees paid 

exclusively with nonfederal funds. The Audit Division recommends that RPOMF provide 

evidence that monthly logs were maintained for such employees, or that RPOMF implement a 

plan to maintain such monthly payroll logs in the future. 

The Audit Division’s decision to include the employees paid exclusively with nonfederal 

funds raises a legal issue as to whether the requirement that a State or local party committee keep 

a monthly log “of the percentage of time each employee spends in connection with a Federal 

election” applies to employees who work exclusively on non-federal matters and are paid solely 

with non-federal funds. 11 C.F.R. § 106.7(d)(1). We believe that it does, as explained below. 

However, the Commission has not been consistent on this issue. We, therefore, recommend that 

the Audit Division raise the issue in the cover memorandum to the Commission. 

Section 106.7(d)(1) requires state and local party committees to maintain “a monthly log 

of the percentage of time each employee spends in connection with a Federal election.” 

11 C.F.R. § 106.7(d)(1). Depending on the percentage of time the employee spends on federal 

activities, the regulation dictates which accounts the committee may use to pay for the salary and 

benefit of the employee. Accordingly, salaries and benefits for employees who spend more than 

25% of their compensated time on federal election activity (“FEA”) or activities in connection 

with a federal election in a given month must be paid only from a federal account. 52 U.S.C. 

§ 30101(20)(A)(iv); 11 C.F.R. § 106.7(d)(1)(ii); see 52 U.S.C. § 30125(b)(2). Employees who 

spend 25% or less of their time on FEA or activities in connection with a federal election must be 

paid either from a federal account or allocated as administrative costs. 11 C.F.R. 

§106.7(c)(1), (d)(1)(i). Employees who spend none of their compensated time on FEA or 

activities in connection with a federal election may be paid entirely from a nonfederal account as 

long as the funds comply with state law. 11 C.F.R. § 106.7(d)(1)(iii). 

Although a committee may use nonfederal funds to pay the salary and benefits of 

employees who spend no time on federal activities, the regulation nonetheless requires 

committees to maintain a monthly log for “each employee.” This necessarily includes all of the 

committee’s employees, including those who spend no time in connection with federal elections, 

because zero percent is also a percentage of time spent in connection with federal elections. This 

reasoning parallels the reasoning that the Commission adopted when considering whether 

committees must maintain monthly logs for employees spending 100% of their time in 

connection with federal elections. See Memorandum from Lisa J. Stevenson to Commission on 

2 This amount in payroll does not include payments to employees paid 100% with federal funds. See 

Proposed IAR, at Part 1. Background, Commission Guidance, at 1. 
 

 

 

 

 

 

 

 

 

 

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Request for Consideration of a Legal Question involving the Vermont Democratic Party (LRA 

917) at 2-3 (Oct. 23, 2012) (Commission approved OGC recommendation to require logs for 

employees who spend 100% of time in connection with federal elections); Memorandum from 

Lisa J. Stevenson to Commission on Request for Consideration of a Legal Question on 

Democratic Party of Illinois (LRA 921) at 2 (Oct. 31, 2012) (same). 

Moreover, maintaining a log for all staff, including those who did not spend time on 

federal activity, is necessary to ensure that the Commission can verify that those employees did 

not spend any time on federal activity. 11 C.F.R. § 104.14(b)(1). As a practical matter, the 

Commission has no way of knowing whether any employees spent none of their time on federal 

election-related activities unless it can review documentation such as a log that indicates that 

information. The Commission has adopted this rationale in the two most recent audits involving 

this recordkeeping requirement. See Final Audit Report on Democratic Party of Hawaii (Feb. 

16, 2018) at 25 (approving a finding that the committee failed to maintain a monthly payroll log 

for each employee, including those employees on the payroll who worked exclusively on 

nonfederal activities); Final Audit Report on Illinois Republican Party (Apr. 6, 2015) at 12 

(same). 

We note, however, that in several earlier audits the Commission could not agree whether 

monthly payroll logs were required for employees who were paid exclusively with nonfederal 

funds. See Final Audit Report on Utah Republican Party (Jan. 23, 2017), Final Audit Report on 

South Dakota Democratic Party (Apr. 27, 2015), Final Audit Report on Kentucky State 

Democratic Central Committee (Apr. 20, 2015), Final Audit Report on Democratic Party of 

Wisconsin (Apr. 6, 2015), Final Audit Report on Democratic Party of Illinois (Nov. 5, 2014), 

Final Audit Report on State Democratic Executive Committee of Alabama (May 12, 2014), Final 

Audit Report on Republican Party of Iowa (Mar. 18, 2014).3 In these audits, the Commission 

moved the findings related to this issue to the additional issues section of the respective final 

audit reports because there were not four affirmative votes to include the findings. Commission 

Directive 70 at 4 (Apr. 26, 2011). 

Given this inconsistent treatment of the audits on this issue, we recommend that the Audit 

Division raise this issue in the cover memorandum to the Commission that will accompany this 

audit report. 

II. REPORTING OF APPARENT INDEPENDENT EXPENDITURES 

(FINDING 3). 

The proposed IAR finds that RPOMF failed to disclose any independent expenditures on 

Schedule E, including for 24-/48-hour reports. The proposed IAR notes, however, that RPOMF 

made apparent independent expenditures totaling $781,290 and disclosed them on Schedule B, 

Line 21(b) (Other Federal Operating Expenditures); Schedule B, Line 30(b) (Federal Election 

3 The Office of General Counsel and the Audit Division have consistently recommended that the 

Commission find that monthly payroll logs are required for employees paid with 100% nonfederal funds. See, 

Memorandum from Lisa J. Stevenson to Patricia C. Orrock, IAR on the Democratic Party of Wisconsin (LRA 952) 

(Jan.29, 2014) and Interim Audit Report on the Democratic Party of Wisconsin (Apr. 10, 2014). 
 

 

 

 

 

 

 

 

 

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Activity Paid Entirely With Federal Funds), and Schedule H4 (Disbursements for Allocated 

Federal/NonFederal Activity). 

In response, RPOMF representatives stated that “...expenditures referenced were all 

general party building fundraising for the committee’s general fund. The letters and scripts 

contained multi-candidate references and did not advocate or oppose one single candidate.” 

We concur with the Audit Division that the costs associated with these media-related 

communications should have been disclosed on Schedule E as Independent Expenditures. We 

disagree with RPOMF’s apparent assertion that the cost of fundraising communications by 

political committees are exempt from being treated as independent expenditures as a matter of 

law. 

An independent expenditure is an expenditure for a communication that expressly 

advocates the election or defeat of a clearly identified candidate that is not coordinated with a 

candidate or their agent. 52 U.S.C. § 30101(17); 11 C.F.R. § 100.16. In turn, a communication 

expressly advocates the election or defeat of a clearly identified federal candidate if it uses 

phrases such as “vote for the President,” “re-elect your Congressman,” “support the Democratic 

nominee,” “cast your ballot for the Republican challenger for U.S. Senate in Georgia,” “Smith 

for Congress,” “Bill McKay in ’94,” “vote Pro-Life” or “vote Pro-Choice” accompanied by a 

listing of clearly identified candidates described as Pro-Life or Pro-Choice, “vote against Old 

Hickory,” “defeat” accompanied by a picture of one or more candidate(s), “reject the incumbent” 

or communications of campaign slogan(s) or individual word(s), which in context can have no 

other reasonable meaning than to urge the election or defeat of one or more clearly identified 

candidate(s), such as posters, bumper stickers, advertisements, etc. which say “Nixon’s the One”, 

“Carter ‘76”, “Reagan/Bush” or “Mondale!” 11 C.F.R. § 100.22(a). 

A communication also constitutes express advocacy if, when taken as a whole and with 

limited reference to external events, such as the proximity to the election, it could only be 

interpreted by a reasonable person as containing advocacy for the election or defeat of one or 

more clearly identified candidate(s), because: “(1) the electoral portion of the communication is 

unmistakable, unambiguous, and suggestive of only one meaning; and (2) [r]easonable minds 

could not differ as to whether it encourages actions to elect or defeat one or more clearly 

identified candidate(s) or encourages some other kind of action.” 11 C.F.R. § 100.22(b). 

In adopting the definition of express advocacy in section 100.22, the Commission 

explained that the “subjective intent of the speaker” is not a relevant consideration when 

deciding whether a communication contains express advocacy. See Express Advocacy; 

Independent Expenditures; Corporate and Labor Expenditures, 60 Fed. Reg. 35,292, 35,295 (July 

6, 1995). Moreover, the Commission explained that urging recipients to contribute money to a 

candidate may be deemed express advocacy: “Please note that exhortations to contribute time or 

money to a candidate would also fall within the revised definition of express advocacy. The 

expressions enumerated in Buckley included ‘support,’ a term that encompasses a variety of 

activities beyond voting.” Id. at 35294. See also Federal Election Commission v. Christian 

Coalition, 52 F.Supp.2d 45, 61-62 (D.D.C. 1999) (“The most obvious electoral action is to vote 

for or against the candidate. But as the Buckley Court recognized when it included the verb 
 

 

 

 

 

 

 

 

 

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“support” in its non-exclusive list, see 424 U.S. at 44 n.52, 96 S. Ct. 612, express advocacy also 

includes verbs that exhort one to campaign for, or contribute to, a clearly identified candidate.”).4 

Since the adoption of the express advocacy definition, the Commission has consistently 

affirmed that the cost of fundraising communications may be independent expenditures if they 

contain express advocacy. Notably, the Commission included fundraising communications in 

independent expenditure reporting-related findings in four previous audits. See Final Audit 

Report on National Campaign Fund at 9, 12-13 (Oct. 12, 2012); Final Audit Report on the 

Legacy Committee Political Action Committee at 8, 10 (July 31, 2012); Final Audit Report on 

the Conservative Majority Fund, at 16-17 (approved Dec. 6, 2017); Final Audit Report on the 

Freedom’s Defense Fund, at 12-13 (Dec. 6, 2017); but see Vote Certification, Audit Division 

Recommendation Memorandum on the Mississippi Republican Party (Feb. 11, 2021) (failing to 

agree by four votes to include a finding relating to the reporting of fundraising communications 

as independent expenditures). The Commission similarly found reason to believe that a failure to 

file independent expenditure reports for the costs of fundraising letters expressly advocating the 

election or defeat of clearly identified candidates violated the Federal Election Campaign Act. 

See MUR 5809 (Christian Voter Project), Factual & Legal Analysis (Sept. 20, 2006) (finding 

reason to believe that the committee failed to file independent expenditure reports for fundraising 

letters), General Counsel’s Report #2 (Apr. 13, 2007). See also MURs 5511 and 5525 

(Swiftboat Veterans and POWs for Truth), Conciliation Agreement, pars. 23-24 (finding 

fundraising communications constituted express advocacy under section 100.22(a)) (Dec. 13, 

2006). 

We further note, in response to RPOMF’s assertion that none of the communications 

referenced only one candidate, that 11 C.F.R. § 100.22 does not limit express advocacy to 

communications that only reference one candidate. Express advocacy applies to “one or more 

clearly identified candidate(s).” 11 C.F.R. § 100.22(a), (b). An independent expenditure, in 

turn, applies to an expenditure for a communication that expressly advocates in accordance with 

section 100.22. 11 C.F.R. § 100.16. As such, taking the two provisions together, any 

expenditure for a communication expressly advocating the election or defeat of one or more 

clearly identified candidates, and which is not a coordinated communication, constitutes an 

independent expenditure subject to appropriate disclosure requirements under the statute and 

regulations.5

 11 C.F.R. §§ 100.16; 100.22. 

While we generally agree with the finding in the Proposed IAR, we recommend that the 

Audit Division revise the Proposed IAR in accordance with this Office's categorization of 

4 See also MURs 5511 and 5525 (Swift Boat Veterans and POWs for Truth), Conciliation Agreement, par. 

24 (Dec.13, 2006) (finding fundraising communications like fundraising appeal discussed in paragraph contained 

express advocacy of defeat of presidential candidate under section 100.22(a), because they reference an election and 

specific candidates and “it advocates action – in this case contributing funds – designed to lead to the candidate’s 

defeat in the election.”). 

5 Similarly, the allocation regulation in Part 106 addresses more than one clearly identified candidate, but 

the reporting regulation for separate segregated funds and connected organizations which allocate expenditures 

among candidates pursuant to Part 106 addresses one or more clearly identified candidates. Taking these provisions 

together, the purpose of these regulations is to allocate and report independent expenditures and other expenditures 

that clearly identify more than one federal candidate. 
 

 

 

 

 

 

 

 

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individual communications addressed below. The materials associated with these 

communications appear in a chart, “Schedule of Review of Communications – to OGC.” We 

incorporate this chart by reference in this memorandum, and we advise the Audit Division to 

make this chart, along with the communications addressed in the chart, available to the 

Commission. Each of these communications is identified below by the index to server code as it 

appears in the chart, and are grouped in accordance with the reasoning for our conclusions. 

1. Donor scripts for which there is express advocacy only if the script reader 

advances to a certain point in the script: 

In several of the telephone communications for which RPOMF provided a script, the 

communication only expressly advocates the election or defeat of one or more clearly identified 

candidates if the caller reaches a specified point in the script. We recommend that the Audit 

Division include, in the recommendations section of this finding, an opportunity for RPOMF to 

produce documentation showing that the scripts were never used or that the callers reading the 

script never reached the point in the script where the communication included express advocacy, 

as a means to demonstrate that the scripts did not require reporting as independent expenditures. 

The following scripts include express advocacy only if a successful pledge is made: 

02 - RPM Donor_Script_20170117 

03 - RPM Donor_Script_20170509 

12 - RPM Prospecting Script_20180304 

34 - RPM UNF_Sript_20181205 

13 - RPM Donor_Script_20180702 

The following script includes express advocacy only if the caller reaches the stage for a 

third ask for a pledge, or if the caller makes a successful pledge: 

04 - RPM Donor_Script_20170926 

The following scripts include express advocacy only if the caller reaches the stage for a 

second ask for a pledge, or if the caller makes a successful pledge: 

04 - RPM Donor_Script_20171228 

17 - RPM Donor_Script_20180918 

12 - RPM Prospecting Script _ 030418 

2. Communications that OGC believes fail to expressly advocate the election or 

defeat of one or more clearly identified candidates. 

OGC disagrees with the conclusions concerning several communications identified in the 

Proposed IAR materials as expressly advocating the election or defeat of one or more clearly 

identified candidates. These communications either fail to identify one or more clearly identified 

candidates, fail to include phrases advocating the election or defeat of such candidate(s) (section 

100.22(a)), or fail to include a call to action under section 100.22(b)(2). A parenthetical follows 

each communication identifier with a description of the language at issue. 
 

 

 

 

 

 

 

 

 

 

 

 

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a. No clearly identified candidate: 

14 - MN Donor_L1_20180702 

20 - MN Donor_L3_20180918 

b. No "elect" or "defeat" along with the identification of the candidate (no 

100.22(a)), and no call to action (100.22(b)): 

20 - MN Donor_L3_20180918 

27 - MN_L3_20170117 

32 - MN Donor_L2_20181205 

35 - Mailchimp-4-23-18 

42 - MNGOP_MN_Eblast_Franken_V1 

43 - MNGOP_MN_Eblast_Franken_V2 

108 - LEWIS-CO-MN-005 - Craig Failed Leadership 1 

94 - Lewis-CO-MN-003-Seniors 1 

97 - Tina Smith A big spending Politician Facebook Ad.mp4 

103 - PAULS-CO-MN-507 - Medicare Contrast 

104 - LEWIS-CO-MN-007 - Craig Failed Leadership 2 

105 - PAULS-CO-MN-508-Medicare Contrast 1 

109 - LEWIS-CO-MN-006 - Seniors 2.pdf 

115 - LEWIS-CO-MN-002 - Craig Hit - VDP #1.pdf 

116 - LEWIS-CO-MN-004 - Multi-Issue #2 -- VDP.pdf 

117 - LEWIS-CO-MN-008 - Multi-Issue #3 --- VDP.pdf 

106 - PAULS-CO-MN-510-Guns Positive 

3. OGC concludes express advocacy, Audit concludes not express advocacy. 

One communication, 37 - Mailchimp-6-22-18, included a phrase expressly advocating the 

election of clearly identified candidates, but was not included among the communications in this 

finding. Near the end of this communication, a brochure, it says "Yes, I want to help elect our 

endorsed candidates today!" and the communication includes pictures and names of the endorsed 

candidates, including two United States Senate candidates. This meets the requirements of 

11 C.F.R. § 100.22(a), because it uses the phrase “elect our endorsed candidates” accompanied 

by the names and pictures of two United States Senate candidates, who are identified as holding 

these offices.