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By Office of the Commission Secretary at 9:28 am, May 27, 2022

May 27, 2022 

MEMORANDUM

To: The Commission 

Through: Alec Palmer 

Staff Director 

Patricia C. Orrock 

Chief Compliance cer 

Dayna C. Brown 

Assistant Staff Director 

e 

irecto 

Office 

sion 

r 

From: 

Audit Division 

Kendrick Smith 

Audit Manager 

By: David P. Butler 

Lead Auditor 

Subject: Resubmission - Audit Division Recommendation Memorandum on the 

Democratic Party of Arkansas (A19-15) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presented the Draft Final Audit Report (DFAR) to the Democratic Party of 

Arkansas (DPA) on January 31, 2022 (see attachment). DPA did not request an audit 

hearing. 

This office is resubmitting the subject Audit Division Recommendation Memorandum 

(ADRM). The original ADRM circulated to the Commission on March 2, 2022 and was 

withdrawn on March 21, 2022. Subsequently, on March 30, 2022, the Office of General 

Counsel (OGC) issued comments (LRA 1153, dated March 30, 2022, attached) revisiting 

its analysis of Finding 3, Reporting of Media Related Expenditures, pertaining to door 

hangers. On April 19, 2022, DPA responded to OGC’s analysis of Finding 3. DPA’s 

February 10, 2022 response to the DFAR and April 19, 2022 response to the Finding 3 

analysis are noted below. 

This memorandum provides the Audit staff’s recommendation for each finding outlined in 

the DFAR. 
2 

Finding 1. Reporting of Debts and Obligations 

The Audit staff recommends that the Commission find that DPA failed to disclose 

debts and obligations to vendors totaling $351,097. 

Finding 2. Recordkeeping for Employees 

In response to the DFAR, DPA reiterated that it “has instituted procedures to ensure 

that time records are maintained for all employees who are paid in part with nonfederal funds and also plans to create a procedure for recordkeeping for employees 

paid exclusively with non-federal funds, pending the outcome of the Final Audit 

Report.” DPA also reiterated that, in its view, payroll records for the employees 

paid exclusively with non-federal funds should not be included in the finding. DPA 

further stated that some Commissioners previously determined, in other audits, that 

employees paid with exclusively non-federal funds was outside the scope of the 

Commission’s jurisdiction.1

 DPA acknowledged that those Commissioners who 

voted to determine that such recordkeeping is outside the scope of regulation are no 

longer members of the Commission. Additionally, DPA stated: 

“In response to the lack of four Commissioners to determine that such 

recordkeeping is required, many party committees have been under the 

belief that such recordkeeping is not required. If the Commission decides 

to reverse course and determine by at least four votes that recordkeeping 

for non-federal payroll is, in fact, required, the DPA requests that the 

regulated community be given sufficient notice that there are now 

sufficient votes to require recordkeeping in such instances. In our view, 

a quiet vote to approve this finding as it is currently constituted is not 

sufficient notice.” 

There have been audits in which the Commission did not have four or more 

affirmative votes to find that monthly payroll logs were required for employees paid 

with exclusively non-federal funds. The Audit staff notes, however, that in two 

recent audits which included non-federal payroll, the Commission approved the 

recordkeeping for employees finding. The Audit staff, therefore, believes DPA’s 

statement that the Commission has failed to notify the regulated community of its 

treatment of this issue is inaccurate. See Final Audit Report of the Connecticut 

Democratic State Central Committee (dated Feb. 23, 2022), pages 10 - 12 

(approving a finding for payroll which was allocated with federal and non-federal 

funds and payroll paid exclusively with non-federal funds); and Final Audit Report 

of the Republican Party of Minnesota-Federal (dated Feb. 11, 2022), pages 8 - 10 

(same). 

The Commission also approved other recordkeeping for employees findings in 

which monthly payroll logs were not maintained for employees paid with 

exclusively non-federal funds; two of these audits were publicly available when 

DPA submitted its response to the DFAR. See Final Audit Report on Democratic 

Party of Hawaii (dated Feb. 16, 2018), pages 25-26 (same); and Final Audit Report 

on Illinois Republican Party (dated Oct. 24, 2017), pages 12-14 (same). It was in 

several earlier audits that the Commission did not have four or more affirmative 

1

 In those audits, the Commission moved the finding to the Additional Issues section of the respective final 

audit report since there were not four affirmative votes. 
 

3 

votes to find that monthly payroll logs were required for employees who were paid 

exclusively with non-federal funds. See Final Audit Report on Utah Republican 

Party (dated Jan. 23, 2017), Final Audit Report on South Dakota Democratic Party 

(dated Apr. 27, 2015), Final Audit Report on Kentucky State Democratic Central 

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

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

(dated Nov. 5, 2014), Final Audit Report on State Democratic Executive Committee 

of Alabama (dated May 12, 2014), and the Final Audit Report on the Republican 

Party of Iowa (dated Mar. 18, 2014). 

As such, the Audit staff recommends that the Commission find that DPA did not 

maintain monthly payroll logs or equivalent records, totaling $408,872, to document 

the percentage of time each employee spent in connection with a federal election for 

calendar years 2017 and 2018. 

Finding 3. Reporting of Media Related Expenditures 

In response to the DFAR, DPA reiterated its position that the expenditures totaling 

$22,803, “were properly made as exempt activities and were fully coordinated with 

the candidate.” DPA stated that the declaration from its former Director of 

Operations supports its contention. DPA further stated, “In the recent consideration 

of the Draft Final Audit Report of the Connecticut Democratic State Central 

Committee (Agenda Document 21-44-A for Open Meeting of December 16, 2021), 

the Commission found that the state party had provided sufficient documentation 

related to volunteer mailings based solely upon the declarations provided by the 

committee. It must do so here as well.” 

The Audit staff notes that in the December 16, 2021 consideration of the Audit 

Division Recommendation Memorandum on the Connecticut Democratic State 

Central Committee, the Commission voted 5-0 to reject the Reporting of Apparent 

Independent Expenditures finding, for which the committee provided a sworn 

declaration to document the volunteer materials exemption. 

In LRA 1153, dated March 30, 2022, OGC revised its conclusion regarding whether 

the pledge cards and walking cards (referred to as “door hangers”2

 in this ADRM), 

are public communications. OGC stated that door hangers that qualify as exempt 

under the volunteer materials exemption should be excluded from being classified 

as party coordinated expenditures, but door hangers that do not qualify for the 

volunteer materials exemption likely are public communications and, therefore, also 

party coordinated expenditures. OGC recommends that the cost of the door hangers 

be included in Finding 3 as a party coordinated expenditure because if they are not 

within the volunteer materials exemption, the door hangers are likely public 

communications that otherwise meet the definition of “party coordinated 

communication” in 11 C.F.R. § 109.37. 

In response to OGC’s LRA 1153, dated March 30, 2022, DPA maintained that the 

door hangers at issue qualify for the volunteer materials exemption, noting that 

“documentation beyond a sworn affidavit has never been required” to qualify for 

2

 DPA’s former Director of Operations characterized the pledge cards and walking cards as “door hangers” 

in her declaration. 
4 

the exemption. DPA stated that the process of distributing door hangers is “very 

decentralized,” making it difficult to document such activity, in contrast to 

documenting the volunteer activity relative to exempt mail pieces which are 

generally handled in a closed environment. 

DPA further stated that the door hangers should not be included in Finding 3 because 

they are not “public communications” and therefore cannot qualify as coordinated 

party expenditures. This, DPA asserted, is due to the content standard which states 

that a communication must be a “public communication” to meet the definition of a 

coordinated party expenditure. 

As a result of OGC’s revised conclusion regarding the door hangers, the Audit staff 

has added the $4,379 cost of the door hangers to the $18,424 cost of the direct 

mailers, for a revised coordinated party expenditure total of $22,803. DPA provided 

a sworn declaration to document the volunteer materials exemption for the door 

hangers and direct mailers, and the Audit staff recommends the Commission 

determine whether the declaration sufficiently documents volunteer involvement 

and satisfies the exemption, given the lack of clarity regarding how the exemption 

should be applied. 

Should the Commission determine that the declaration does not sufficiently 

document the involvement of volunteers for the door hangers and direct mailers, and 

that the volunteer materials exemption does not apply to these expenditures, the 

Audit staff recommends that the Commission find that DPA exceeded the 

coordinated party expenditure limit by $15,200. 

Finding 4. Disclosure of Loans and Loan Repayments 

The Audit staff recommends that the Commission find that DPA failed to correctly 

disclose transactions totaling $32,500 on a line of credit, the correct terms and 

balances for outstanding loans totaling $87,140 and loan repayments of $3,563. 

The Office of General Counsel has reviewed this memorandum and concurs with the 

recommendations. 

If this memorandum is approved, the Proposed Final Audit Report will be prepared and 

circulated within 30 days of the Commission’s approval. 

If this Audit Division Recommendation Memorandum is not approved on a tally vote, 

Directive No. 70 states that the matter will be placed on the next regularly scheduled 

open session agenda. 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact David Butler or Kendrick Smith at 694-1200. 

Attachments: 

- Draft Final Audit Report of the Audit Division on the Democratic Party of Arkansas 

- Comments on Draft Final Audit Report on the Democratic Party of Arkansas, dated 

December 23, 2021 (LRA 1153) 
5 

- Comments on Audit Division Recommendation Memorandum on the Democratic 

Party of Arkansas, dated March 30, 2022 (LRA 1153) 

cc: Office of General Counsel 
Draft Final Audit Report of the

Audit Division on the 

Democratic Party of Arkansas 

(January 1, 2017 - December 31, 2018) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.1 The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Committee (p. 2) 

The Democratic Party of Arkansas is a state party committee 

headquartered in Little Rock, Arkansas. For more information, 

see the chart on the Committee Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals $ 460,817 

o Contributions from Political 

Party and Other Committees 16,430 

o Transfers from Affiliated/Other 

Party Committees 863,936 

o Loans Received 32,500 

o Other Receipts 40,596 

o Transfers from Non-Federal 

Account 567,237 

Total Receipts $ 1,981,516 

•

o Operating Expenditures $ 299,148 

o Allocated Federal/Non-Federal 

Expenditures 1,198,302 

o Transfers to Affiliated/Other 

Party Committees 33,710 

o Coordinated Party Expenditures 6,797 

o Loan Repayments 82,202 

o Other Disbursements 29,875 

o Federal Election Activity 326,518

Total Disbursements $ 1,976,552 

Disbursements 

Findings and Recommendations (p. 3) 

• Reporting of Debts and Obligations (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

• Reporting of Media Related Expenditures (Finding 3) 

• Disclosure of Loans and Loan Repayments (Finding 4) 

1

 52 U.S.C. §30111(b). 
Draft Final Audit Report of the 

Audit Division on the 

Democratic Party of Arkansas 

(January 1, 2017 - December 31, 2018) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

 Commission Guidance 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 3 

Part III. Summaries 

Findings and Recommendations 4 

Part IV. Findings and Recommendations 

Finding 1. Reporting of Debts and Obligations 6 

Finding 2. Recordkeeping for Employees 7 

Finding 3. Reporting of Media Related Expenditures 9 

Finding 4. Disclosure of Loans and Loan Repayments 19 
1 

Part I 

Background 

Authority for Audit

This report is based on an audit of the Democratic Party of Arkansas (DPA), undertaken 

by the Audit Division of the Federal Election Commission (the Commission) in 

accordance with the Federal Election Campaign Act of 1971, as amended (the Act). The 

Audit Division conducted the audit pursuant to 52 U.S.C. §30111(b), which permits the 

Commission to conduct audits and field investigations of any political committee that is 

required to file a report under 52 U.S.C. §30104. Prior to conducting any audit under this 

subsection, the Commission must perform an internal review of reports filed by selected 

committees to determine if the reports filed by a particular committee meet the threshold 

requirements for substantial compliance with the Act. 52 U.S.C. §30111(b). 

Scope of Audit

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the receipt of excessive contributions and loans;

2. the receipt of contributions from prohibited sources;

3. the disclosure of contributions received;

4. the disclosure of disbursements, debts and obligations;

5. the disclosure of expenses allocated between federal and non-federal accounts;

6. the consistency between reported figures and bank records;

7. the completeness of records; and

8. other committee operations necessary to the review.

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the Commission’s “Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission,” several state party committees 

unaffiliated with DPA requested early consideration of a legal question raised during 

audits covering the 2010 election cycle. Specifically, the Commission addressed whether 

monthly time logs under 11 CFR §106.7(d)(1) were required for employees paid with 100 

percent federal funds. 

The Commission concluded, by a vote of 5-1, that 11 CFR §106.7(d)(1) does require 

committees to keep a monthly log for employees paid exclusively with federal funds. 

Exercising its prosecutorial discretion, however, the Commission decided it will not 

pursue recordkeeping violations for the failure to keep time logs or to provide affidavits 

to account for employee salaries paid with 100 percent federal funds and reported as 

such. The Audit staff informed DPA representatives of the payroll requirement and the 

Commission’s decision not to pursue recordkeeping violations for failure to keep payroll 

logs for salaries paid and correctly reported as 100 percent federal. This audit report does 

not include any findings or recommendations with respect to DPA employees paid with 

100 percent federal funds and reported as such. 
2 

Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration March 8, 1976 

• Audit Coverage January 1, 2017 – December 31, 2018 

Headquarters Little Rock, Arkansas 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Three Federal, Two Non-Federal 

Treasurer 

• Treasurer When Audit Was Conducted Philip A. Hood (6/11/2021 – Present) 

John Unger (1/10/2019 – 6/10/2021) 

• Treasurer During Period Covered by Audit Dawne Vandiver (10/27/2017 – 1/9/2019) 

Tyler Clark (3/17/2014 – 10/26/2017) 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and Paid Staff 

Recordkeeping Tasks 
3 

Overview of Financial Activity

(Audited Amounts) 

Cash on hand @ January 1, 2017 $ (2,431) 

Receipts 

o Contributions from Individuals 460,817 

o Contributions from Political Party and Other 

Committees 16,430 

o Transfers from Affiliated/Other Party 

Committees 863,936 

o Loans Received 32,500 

o Other Receipts 40,596 

o Transfers from Non-Federal Account 567,237 

Total Receipts $1,981,516 

Disbursements 

o Operating Expenditures 299,148 

o Allocated Federal/Non-Federal Expenditures 1,198,302 

o Transfers to Affiliated/Other Party 

Committees 33,710 

o Coordinated Party Expenditures 6,797 

o Loan Repayments 82,202 

o Other Disbursements 29,875 

o Federal Election Activity 326,518 

Total Disbursements $1,976,552 

Cash on hand @ December 31, 2018 $ 1,7152 

2

 DPA disclosed its ending cash on hand on December 31, 2018 as $1,715, however, based on its disclosed 

beginning cash on hand on January 1, 2017 of negative $2,431, plus receipts of $1,981,516, less disbursements of 

$1,976,552, the audit-calculated cash on hand on December 31, 2018 should be $2,533. 
4 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Reporting of Debts and Obligations

During audit fieldwork, the Audit staff noted that DPA failed to disclose debts and 

obligations owed to 27 vendors totaling $351,097. In response to the Interim Audit 

Report recommendation, DPA corrected the public record by filing a Form 99 

(Miscellaneous Electronic Submission) which correctly disclosed its debts and 

obligations. (For more detail, see p. 6.) 

Finding 2. Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that DPA did not maintain any 

monthly logs, as required, to document the percentage of time each employee spent in 

connection with a federal election. For 2017 and 2018, the Audit staff identified 

payments to DPA employees totaling $408,872 for which DPA did not maintain monthly 

logs. This consisted of payroll which was allocated with federal and non-federal funds 

and payroll paid exclusively with non-federal funds. In response to the Interim Audit 

Report recommendation, DPA stated it “has instituted procedures to ensure that time 

records are maintained for all employees who are paid in part with non-federal funds” 

and “employees who are paid exclusively with non-federal funds are outside the scope of 

the Commission’s jurisdiction and should not have been included in the finding.” The 

Audit staff acknowledges DPA implemented the recommendations outlined within the 

Interim Audit Report for allocated federal and non-federal payroll. (For more detail, see 

p. 7.)

Finding 3. Reporting of Media Related Expenditures 

During audit fieldwork, the Audit staff reviewed expenditures totaling $22,803, that DPA 

disclosed on Schedule B (Itemized Disbursements), Line 30(b) (Federal Election Activity 

Paid Entirely with Federal Funds). These expenditures appeared to be independent 

expenditures containing express advocacy which should have been disclosed on Schedule 

E, Line 24 (Independent Expenditures). DPA may also have been required to file a 24-

hour report for $18,424, the amount DPA paid for direct mailers supporting a candidate 

for federal office. 

In response to the Interim Audit Report recommendation, DPA disagreed with the 

characterization of these expenditures as independent expenditures and stated the 

expenditures were “properly made as exempt activities and were fully coordinated with 

the candidate.” DPA further indicated that the expenditures qualify for the volunteer 

materials exemption because the pledge cards and walking cards totaling $4,379 (referred 

to as printed materials in DPA’s response to the Interim Audit Report), and the direct 

mailers, totaling $18,424, were “distributed through the substantial use of volunteers.” A 
5 

declaration from DPA’s former Director of Operations was also provided, attesting to the 

use of volunteers. 

After consultation with our Office of General Counsel, the Audit staff concluded that the 

pledge cards, walking cards and direct mailers are not independent expenditures, given 

DPA’s assertion that the activities were fully coordinated with the candidate. As such, 

the filing of a 24-hour report was not required for the direct mailers. In addition, whereas 

the pledge cards and walking cards are not coordinated expenditures because they are not 

public communications, the direct mailers are a coordinated expenditure. Given DPA’s 

assertion that the direct mailers are subject to the volunteer materials exemption, and due 

to the lack of a clear standard for applying the volunteer materials exemption, the 

Commission will determine whether the declaration submitted by DPA suffices to 

document the involvement of volunteers. (For more detail, see p. 9.) 

Finding 4. Disclosure of Loans and Loan Repayments 

During audit fieldwork, the Audit staff determined that DPA failed to properly disclose 

transactions totaling $32,500 on a line of credit, the correct terms and balances for 

outstanding loans totaling $87,140, and loan repayments of $3,563. DPA did not 

properly disclose the new loans and the terms and balances for outstanding loans on 

Schedules C (Loans) and/or C-1 (Loans and Line of Credit from Lending Institutions). In 

addition, some loan repayments were reported to the incorrect payee on Schedule B, Line 

26 (Loan Repayments) and others were reported with disclosure errors on Schedule C. 

In response to the Interim Audit Report recommendation, DPA corrected the public 

record by filing a Form 99 (Miscellaneous Electronic Submission) which correctly 

disclosed the line of credit, the new and outstanding loans, and the loan repayments. (For 

more detail, see p. 19.) 
 

6 

Part IV 

Findings and Recommendations 

Finding 1. Reporting of Debts and Obligations 

Summary 

During audit fieldwork, the Audit staff noted that DPA failed to disclose debts and 

obligations owed to 27 vendors totaling $351,097. In response to the Interim Audit 

Report recommendation, DPA corrected the public record by filing a Form 99 

(Miscellaneous Electronic Submission) which correctly disclosed its debts and 

obligations.

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount

and nature of outstanding debts and obligations until those debts are extinguished. 52

U.S.C. §30104(b)(8) and 11 CFR §§104.3(d) and 104.11(a).

B. Separate Schedules. A political committee must file separate schedules for debts

owed by the committee and debts owed to the committee, together with a statement

explaining the circumstances and conditions under which each debt and obligation

was incurred or extinguished. 11 CFR §104.11(a).

C. Itemizing Debts and Obligations.

• A debt of $500 or less must be reported once it has been outstanding 60 days from

the date incurred (the date of the transaction); the committee reports it on the next

regularly scheduled report.

• A debt exceeding $500 must be disclosed in the report that covers the date on

which the debt was incurred, except that any obligation incurred for rent, salary or

other regularly reoccurring administrative expense shall not be reported as a debt

before the payment due date. 11 CFR §104.11(b).

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff reviewed DPA’s disbursement records and

disclosure reports for proper reporting of debts and obligations. This review identified

debts owed to 27 vendors totaling $351,0973

 that DPA failed to report on Schedule D

during the audit period. Based on a review of the records, 26 of these vendors provided

printing services, event rentals, video production, consulting, IT work, mailings, utility

service, compliance, photography, finance director retainer, legal fees, fundraising, and

cleaning services. The remaining vendor was a credit card vendor that DPA did not

report on Schedule D during the audit period.

3 Each debt was counted only once, even if it was required to be disclosed over multiple periods. 
 

 

7 

DPA reported debt totaling $32,984 on Schedule D during the audit period. The Audit 

staff calculated the debts owed to the vendors based on the invoice date and the 

subsequent payment date. Debts were outstanding for periods ranging from 15 days to 

904 days. 

B. Interim Audit Report & Audit Division Recommendation

The Audit staff discussed this matter with DPA representatives during the exit conference

and provided a schedule detailing the transactions requiring disclosure on Schedule D.

During the exit conference, DPA representatives questioned the inclusion of debts

relating to recurring administrative expenses. The Audit staff responded that regularly

recurring administrative expenses are subject to debt reporting requirements.4 In its

response to the exit conference, DPA did not provide any further comments.

The Interim Audit Report recommended that DPA provide documentation demonstrating 

that the transactions totaling $351,097 were not obligations which required reporting on 

Schedule D. Absent such documentation, the Interim Audit Report recommended that 

DPA amend its reports or file a Form 99 (Miscellaneous Electronic Submission)5

 to 

correctly disclose these debts and obligations on Schedule D. 

C. Committee Response to Interim Audit Report

In response to the Interim Audit Report recommendation, DPA filed a Form 99

(Miscellaneous Electronic Submission) on November 2, 2021, which did not materially

correct the public record. Subsequently, DPA filed another Form 99 on January 14, 2022

which corrected the public record by disclosing its debts and obligations.

Finding 2. Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined that DPA did not maintain any 

monthly logs, as required, to document the percentage of time each employee spent in 

connection with a federal election. For 2017 and 2018, the Audit staff identified 

payments to DPA employees totaling $408,872 for which DPA did not maintain monthly 

logs. This consisted of payroll which was allocated with federal and non-federal funds 

and payroll paid exclusively with non-federal funds. In response to the Interim Audit 

Report recommendation, DPA stated it “has instituted procedures to ensure that time 

records are maintained for all employees who are paid in part with non-federal funds” 

and “employees who are paid exclusively with non-federal funds are outside the scope of 

the Commission’s jurisdiction and should not have been included in the finding.” The 

Audit staff acknowledges DPA implemented the recommendations outlined within the 

Interim Audit Report for allocated federal and non-federal payroll. 

4

 See 11 CFR §104.11(b). 

5

 DPA was advised by the Audit staff that if it chose to file a Form 99 instead of amending its disclosure 

reports, the form must contain all pertinent information that is required on each schedule. 
8 

Legal Standard 

A. Maintenance of Monthly Logs. Party committees must keep a monthly log of the

percentage of time each employee spends in connection with a federal election.

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows:

• Employees who spend 25 percent or less of their compensated time in a given

month on federal election activities must be paid either from the federal account

or have their pay allocated as administrative costs between the federal and nonfederal accounts;

• Employees who spend more than 25 percent of their compensated time in a given

month on federal election activities must be paid only from a federal account; and

• Employees who spend none of their compensated time in a given month on

federal election activities may be paid entirely with funds that comply with State

law. 11 CFR §106.7(d)(1).

B. Formal Requirements Regarding Reports and Statements. Each political

committee shall maintain records with respect to the matters required to be reported

which shall provide in sufficient detail the necessary information and data from which

the filed reports may be verified, explained, clarified, and checked for accuracy and

completeness. 11 CFR §104.14(b)(1).

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff reviewed disbursements for payroll. DPA did not

maintain any monthly logs or equivalent records to document the percentage of time each

employee spent in connection with a federal election. These logs are required to

document the proper allocation of federal and non-federal funds used to pay employee

salaries and wages. For 2017 and 2018, DPA did not maintain monthly logs for $408,872

in payroll.6 This amount includes:

• Payroll totaling $373,961 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 during the same month;

• Payroll totaling $1,374 for employees reported on Schedule H4 and/or Schedule B

(Itemized Disbursements) and also paid with 100 percent non-federal funds

during the same month; and

• Payroll totaling $33,537 for employees paid exclusively with non-federal funds in

a given month.

B. Interim Audit Report & Audit Division Recommendation

The Audit staff discussed this matter with DPA representatives during the exit conference

and provided a schedule of the payroll transactions. DPA representatives responded that

DPA did not maintain monthly logs for employees during calendar years 2017 and 2018

and objected to the request for non-federal employee payroll records. The Audit staff has

6

 This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such (see Part I, Background, Commission Guidance, and Request for Early Commission Consideration 

of a Legal Question, Page 1). Payroll amounts are stated net of taxes and fringe benefits. 
 

9 

consistently requested these records and included these types of transactions as findings. 

Therefore, these transactions were included in the exit conference as a preliminary 

finding. In its response to the exit conference, DPA did not provide any further 

comments. 

The Interim Audit Report recommended that DPA provide evidence that monthly logs 

were maintained to document the percentage of time employees spent in connection with 

a federal election. Absent the provision of monthly logs specific to employees paid with 

100% non-federal funds, the Interim Audit Report recommended DPA provide evidence 

that records consistent with 11 CFR §104.14(b)(1) were maintained to document that 

certain employees were involved in exclusively non-federal activities. Additionally, the 

Interim Audit Report recommended that DPA provide and implement a plan to maintain 

monthly logs and other records consistent with 11 CFR §104.14(b)(1) in the future. 

C. Committee Response to Interim Audit Report

In response to the Interim Audit Report recommendation, DPA stated it “has instituted

procedures to ensure that time records are maintained for all employees who are paid in

part with non-federal funds.” DPA further noted that the “inclusion of payroll records for

those employees who are paid exclusively with non-federal funds are outside the scope of

the Commission’s jurisdiction and should not have been included in the finding.”

The Audit staff concludes that DPA did not provide monthly logs for the $408,872 in 

payroll. However, DPA complied with the Interim Audit Report recommendation by 

implementing a plan to maintain monthly logs for all employees who are paid in part with 

non-federal funds in the future. 

The Audit staff maintains that DPA was required to maintain monthly logs for its 

employees paid with exclusively non-federal funds, to verify that the employees were not 

engaged in federal activities. Absent the provision of monthly logs specific to employees 

paid with exclusively non-federal funds, DPA may provide evidence that records 

consistent with 11 CFR §104.14(b)(1) were maintained to document that certain 

employees were involved in exclusively non-federal activities. Additionally, for 

employees paid with exclusively non-federal funds, DPA may also implement and 

provide a plan to maintain monthly logs or other records consistent with

11 CFR §104.14(b)(1). 

Finding 3. Reporting of Media Related Expenditures 

Summary 

During audit fieldwork, the Audit staff reviewed expenditures totaling $22,803, that DPA 

disclosed on Schedule B (Itemized Disbursements), Line 30(b) (Federal Election Activity 

Paid Entirely with Federal Funds). These expenditures appeared to be independent 

expenditures containing express advocacy which should have been disclosed on Schedule 

E, Line 24 (Independent Expenditures). DPA may also have been required to file a 24-

hour report for $18,424, the amount DPA paid for direct mailers supporting a candidate 

for federal office. 
10 

In response to the Interim Audit Report recommendation, DPA disagreed with the 

characterization of these expenditures as independent expenditures and stated the 

expenditures were “properly made as exempt activities and were fully coordinated with 

the candidate.” DPA further indicated that the expenditures qualify for the volunteer 

materials exemption because the pledge cards and walking cards totaling $4,379 (referred 

to as printed materials in DPA’s response to the Interim Audit Report), and the direct 

mailers, totaling $18,424, were “distributed through the substantial use of volunteers.” A 

declaration from DPA’s former Director of Operations was also provided, attesting to the 

use of volunteers. 

After consultation with our Office of General Counsel, the Audit staff concluded that the 

pledge cards, walking cards and direct mailers are not independent expenditures, given 

DPA’s assertion that the activities were fully coordinated with the candidate. As such, 

the filing of a 24-hour report was not required for the direct mailers. In addition, whereas 

the pledge cards and walking cards are not coordinated expenditures because they are not 

public communications, the direct mailers are a coordinated expenditure. Given DPA’s 

assertion that the direct mailers are subject to the volunteer materials exemption, and due 

to the lack of a clear standard for applying the volunteer materials exemption, the 

Commission will determine whether the declaration submitted by DPA suffices to 

document the involvement of volunteers. 

Legal Standard 

A. Definition of Independent Expenditures. An independent expenditure is an 

expenditure made for a communication expressly advocating the election or defeat of 

a clearly identified candidate that is not made in cooperation, consultation, or concert 

with, or at the request or suggestion of, a candidate, a candidate’s authorized 

committee, or their agents, or a political party or its agents. 

A clearly identified candidate is one whose name, nickname, photograph or drawing 

appears, or whose identity is apparent through unambiguous reference, such as “your 

Congressman,” or through an unambiguous reference to his or her status as a 

candidate, such as “the Democratic presidential nominee” or “Republican candidate 

for Senate in this state.” 

Expressly advocating means any communication that: 

• Uses phrases such as “vote for the President” or “re-elect your Congressman” or 

communications of campaign slogan(s) or individual word(s), which in context 

can have no other reasonable meaning than to urge election or defeat of one or 

more clearly identified candidates; or 

• When taken as a whole and with limited references to external events, such as 

proximity to the election, could be interpreted by a reasonable person only as 

advocating the election or defeat of one or more clearly identified candidates. 

11 CFR §§100.16(a), 100.17 and 100.22. 

B. Disclosure Requirements – General Guidelines. An independent expenditure shall 

be reported on Schedule E if, when added to other independent expenditures made to 

the same payee during the same calendar year, it exceeds $200. Independent 
11 

expenditures made (i.e., publicly disseminated) prior to payment should be disclosed 

as memo entries on Schedule E and as a debt on Schedule D. Independent 

expenditures of $200 or less need not be itemized, though the committee must report 

the total of those expenditures on Schedule E, Line (b). 11 CFR §§104.3(b)(3)(vii), 

104.4(a) and 104.11. 

C. Last-Minute Independent Expenditure Reports (24-Hour Reports). Any

independent expenditures aggregating $1,000 or more, with respect to any given

election, and made after the 20th day but more than 24 hours before the day of an

election must be reported and the report must be received by the Commission within

24 hours after the expenditure is made. A 24-hour report is required for each

additional $1,000 that aggregates. The 24-hour report must be filed on a Schedule E.

The date that a communication is publicly disseminated serves as the date that the

Committee must use to determine whether the total amount of independent

expenditures has, in the aggregate, reached or exceeded the threshold reporting

amount of $1,000. 11 CFR §§104.4(f) and 104.5(g)(2).

D. Formal Requirements Regarding Reports and Statements. Each political

committee shall maintain records with respect to the matters required to be reported

which shall provide in sufficient detail the necessary information and data from which

the filed reports may be verified, explained, clarified, and checked for accuracy and

completeness. 11 CFR §104.14(b)(1).

E. Allocation of Expenses between Candidates. Expenditures made on behalf of more

than one clearly identified federal candidate shall be attributed to each such candidate

according to the benefit expected to be derived. In the case of a publication or

broadcast communication, the attribution shall be determined by the proportion of

space or time devoted to all candidates. This method shall be used to allocate

payments involving both clearly identified federal candidates and one or more clearly

identified non-federal candidates. 11 CFR §106.1(a).

F. Volunteer Activity. The payment by a state committee of a political party of the

costs of campaign materials (such as pins, bumper stickers, handbills, brochures,

posters, party tabloids or newsletters, and yard signs) used by such committee in

connection with volunteer activities on behalf of any nominee(s) of such party is not a

contribution, provided that the following conditions are met:

• Such payment is not for cost incurred in connection with any broadcasting,

newspaper, magazine, bill board, direct mail, or similar type of general public

communication or political advertising. The term direct mail means any

mailing(s) by a commercial vendor or any mailing(s) made from commercial lists;

• The portion of the cost of such materials allocable to Federal candidates must be

paid from contributions subject to the limitations and prohibitions of the Act;

• Such payment is not made from contributions designated by the donor to be spent

on behalf of a particular candidate for federal office;

• Such materials are distributed by volunteers and not by commercial or for-profit

operations;
12 

• If made by a political committee such payments shall be reported by the political

committee as a disbursement in accordance with 11 CFR §104.3 but need not be

allocated to specific candidates in committee reports; and

• The exemption is not applicable to campaign materials purchased by the national

party committees. 11 CFR §100.87 (a), (b), (c), (d), (e) and (g) and 11 CFR

§100.147 (a), (b), (c), (d), (e) and (g).

G. Coordinated Party Expenditures. National party committees and state party

committees are permitted to purchase goods and services on behalf of candidates in

the general election—over and above the contributions that are subject to contribution

limits. Such purchases are referred to as “coordinated party expenditures.” They are

subject to the following rules:

• The amount spent on “coordinated party expenditures” is limited by statutory

formulas that are based on the Cost of Living Adjustment (COLA) and the voting

age population;

• Party committees are permitted to coordinate the spending with the candidate

committees;

• The parties may make these expenditures only in connection with the general

election;

• The party committees—not the candidates—are responsible for reporting these

expenditures; and

• If the party committee exceeds the limits on coordinated party expenditures, the

excess amount is considered an in-kind contribution, subject to the contribution

limits described above. 52 U.S.C. §30116(d) and 11 CFR §§109.30 and 109.32.

H. Assignment of Coordinated Party Expenditure Limit. A political party may

assign its authority to make coordinated party expenditures to another political party

committee. Such an assignment must be made in writing, state the amount of the

authority assigned, and be received by the assignee before any coordinated party

expenditure is made pursuant to the assignment. The political party committee that is

assigned authority to make coordinated party expenditures must maintain the written

assignment for at least three years. 11 CFR §§104.14 and 109.33(a) and (c).

I. Coordinated Party Communication. A political party communication is

coordinated with a candidate, a candidate’s authorized committee, or agent of any of

the foregoing, when the communication satisfies the following conditions:

(1) The communication is paid for by a political party committee or its agent.

(2) The communication is a public communication that satisfies at least one of the

following content standards.

• Expressly advocates a candidate’s election or defeat 11 CFR §100.22(a) and

(b).

• Involves the dissemination, distribution or republication of a candidate’s

campaign materials.

• Refers to a federal candidate, is directed to the candidate’s constituents and is

distributed within certain time frame before an election.
13 

(3) The communication satisfies at least one of the conduct standards in 11 CFR 

§109.21(d)(1) through (d)(6), subject to the provisions of 11 CFR §109.21(e), (g), 

and (h). 

• Must have been created, produced or distributed at the request of the 

candidate or its agent. 

• Developed with a “material involvement” of the candidate. 

• Created, produced or distributed after “substantial discussion” with the 

candidate or his agents. 

The use of a common vendor in the creation, production or distribution of 

a communication. 11 CFR §109.37. 

J. Reporting Coordinated Party Expenditures. Each political committee shall report 

the full name of each person who receives any expenditure from the reporting 

committee during the reporting period in connection with an expenditure under 11 

CFR Part 109, Subpart D (52 U.S.C. §30116(d)), together with the date, amount and 

purpose of any such expenditure as well as the name of, and office sought by the 

candidate on whose behalf the expenditure is made. 11 CFR §104.3 (b)(1)(viii). 

K. Public Communication (52 U.S.C. § 30101(22)). Public communication means a 

communication by means of any broadcast, cable, or satellite communication, 

newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to 

the general public, or any other form of general public political advertising. The term 

general public political advertising shall not include communications over the 

Internet, except for communications placed for a fee on another person’s Web site. 

Facts and Analysis 

A. Reporting of Apparent Independent Expenditures 

1. Facts 

During audit fieldwork, the Audit staff reviewed disbursements to ensure proper 

reporting. The Audit staff noted that DPA did not disclose any independent 

expenditures on Schedule E, however, it appeared to make apparent independent 

expenditures totaling $22,803 and disclosed them on Schedule B, Line 30(b) 

(Federal Election Activity Paid Entirely with Federal Funds). These expenditures 

were for pledge cards, walking cards, and direct mail pieces, which all contained 

express advocacy. A breakdown analysis for these expenditures is as follows: 

Apparent Independent Expenditures Reported as Federal Election 

Activity (FEA) Paid Entirely with Federal Funds (Associated Mailer 

Provided under 11 CFR §100.22(a)) 

a. DPA made one disbursement for pledge cards totaling $1,128 for which it 

provided a copy of the piece and associated invoice. The pledge card, disclosed 

as “Volunteer Exempt/Printing of Canvass Materials – Tucker for Congress” on 

DPA’s disclosure reports, contained the following phrase: “Pledge to vote early 

for Clarke Tucker.” DPA did not provide evidence of volunteer involvement to 

support the volunteer materials exemption for this activity. This communication 
14 

contained language expressly advocating for the election or defeat of a clearly 

identified candidate, as defined under 11 CFR §100.22(a). 

b. DPA made one disbursement for walking cards totaling $3,251 for which it

provided a copy of the piece and associated invoice. The walking card,

disclosed as “Volunteer Exempt/Printing of Canvass Materials – Tucker for

Congress” on DPA’s disclosure reports, contained the following phrase: “2

Ways to vote for Clarke Tucker.” DPA did not provide evidence of volunteer

involvement to support the volunteer materials exemption for this activity. This

communication contained language expressly advocating for the election or

defeat of a clearly identified candidate, as defined under 11 CFR §100.22(a).

c. DPA made one disbursement for direct mail pieces totaling $18,424 for which it

provided a copy of the pieces and associated invoice. The direct mail pieces,

disclosed as “Printing & Postage/Volunteer Exempt Mailing/Clarke Tucker for

Congress” on DPA’s disclosure reports, contained the following phrase: “Vote

Clarke Tucker for Congress.” DPA did not provide evidence of volunteer

involvement to support the volunteer materials exemption for this activity. This

communication contained language expressly advocating for the election or

defeat of a clearly identified candidate, as defined under 11 CFR §100.22(a).

2. Interim Audit Report & Audit Division Recommendation

The Audit staff discussed this matter with DPA representatives during the exit

conference and provided a schedule detailing these expenditures. DPA

representatives stated that “these were not independent expenditures,” that “no

state party committee has volunteer support for canvassing materials,” and that

“canvassing materials don’t qualify as public communications.” DPA

representatives stated they would “work on obtaining volunteer involvement

support for the Resonance Campaigns expenditure [identified in 1(c) above]... but

not for the Print for Progress canvassing expenditures [identified in 1(a) and 1(b)

above]” because those “two items are not public communications.” In response to

the exit conference, no additional supporting documentation and no further

comment was provided.

The payment by a state or local party committee for the costs of campaign

materials (such as pins, bumper stickers, handbills, brochures, posters, party

tabloids or newsletters, and yard signs) used by such committee in connection with

volunteer activities on behalf of any nominee(s) of such party is not an expenditure

provided that such materials are distributed by volunteers and not by commercial

or for-profit operations. 11 CFR § 100.147(d). The Audit staff contends,

therefore, that whether the volunteer materials exemption applies does not hinge

on the type of campaign material a committee uses, but, instead, on how the

campaign materials are distributed. In particular, the Commission draws a

distinction between campaign materials distributed by volunteers, which qualify

for the exemption, and those that are distributed by paid workers of commercial

entities or for-profit operations, which do not qualify for the exemption. Id. To

determine whether the volunteer materials exemption applies, the Commission

must evaluate whether a committee, in fact, used volunteers to distribute campaign

materials.
15 

The Interim Audit Report recommended that DPA: 

• Provide documentation that apparent independent expenditures, totaling 

$22,803, did not require reporting as independent expenditures; and/or 

• Provide evidence to support the volunteer materials exemption application for 

apparent independent expenditures, totaling $22,803. Such evidence will assist 

the Commission in determining if the volunteer materials exemption is 

applicable to these expenditures. 

Absent such documentation or evidence, the Interim Audit Report recommended 

that DPA amend its reports to disclose these disbursements as independent 

expenditures on Schedule E (Itemized Independent Expenditures) and provide 

documentation to support the date of public dissemination for each communication 

to determine whether a 24-hour report was required to be filed. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, the DPA objected to the 

characterization of these expenditures as independent expenditures. DPA stated 

that “[t]hese expenditures were properly made as exempt activities and were fully 

coordinated with the candidate.” DPA further stated “[t]hese activities fall into 

two categories.” It “sent a volunteer exempt mailing through Resonance 

Campaigns at a cost of $18,423.97” and “paid for printing in the amount of 

$4,378.53 for printed materials that were distributed by hand by volunteers.” 

Regarding DPA’s assertion that the expenditures were “fully coordinated with the 

candidate,” the Audit staff notes that DPA did not amend its disclosure reports to 

disclose these expenditures as coordinated party expenditures on Schedule F 

(Coordinated Party Expenditures). The expenditures remain disclosed on Schedule 

B, Line 30(b) (Federal Election Activity Paid Entirely with Federal Funds). 

Regarding the mailing through Resonance Campaigns of $18,424 [identified in 

1(c) above], the former Director of Operations stated in the declaration submitted 

in response to the Interim Audit Report recommendation, that “the production and 

preparation of this mailing included substantial participation by volunteers 

including sorting, bundling and other tasks in accordance with 11 C.F.R. §100.87 

and Commission precedents related to volunteer exempt mail.” DPA also noted 

that the declaration “complies with the formatting requirements of 28 U.S.C. 

§1746” and, as such, cannot be characterized as “unsworn.” 

Regarding the pledge cards and walking cards (characterized by DPA’s former 

Director of Operations as “door hangers” in her declaration and as “printed 

materials” in DPA’s Interim Audit Report response), DPA stated it was its 

understanding that “since these activities were not public communications, they 

cannot be considered coordinated communications and no further action would be 

necessary regarding these expenditures.” DPA further stated, “it is quite 

uncommon for state party committees to create and maintain documentation 

relating to the volunteer component of such daily canvassing activities. They are 

much too voluminous and difficult for a state party to document. In addition, since 
 

 

 

 

 

 

 

16 

such activities are not public communications, and cannot be considered 

coordinated communications, the need to create and maintain such documentation 

is unnecessary.” The declaration from its former Director of Operations states the 

door hangers were “distributed exclusively by volunteers.” 

B. Volunteer Materials Exemption 

1. Facts 

DPA reported three disbursements totaling $22,803 on Schedule B as Federal 

Election Activity. Two of these disbursements were reported as made to “Print for 

Progress” and the third was reported as made to “Resonance Campaigns, LLC.” 

DPA reported the purposes of the two disbursements made to Print for Progress as 

“Volunteer Exempt/Printing of Canvass Materials – Tucker for Congress,” and the 

After consideration of DPA’s response and in consultation with the Office of 

General Counsel, the Audit staff determined that the disbursement for the pledge 

cards and walking cards did not meet the definition of an independent 

expenditures.7 

 

Regarding the direct mailers, the Audit staff agrees with DPA that these 

expenditures are not independent expenditures, given their coordination with the 

candidate. However, they are considered coordinated expenditures, as direct 

mailers are considered public communications. In addition, these expenditures 

may be subject to the volunteer materials exemption given the declaration from 

DPA’s former Director of Operations. 

Due to the lack of a clear standard for applying the volunteer materials exemption, 

the Audit staff is unable to determine whether the declaration submitted by DPA 

suffices to document the involvement of volunteers. As such, the Commission will 

make a determination at the appropriate phase of the audit process. 

The Audit staff notes that, if the Commission determines these expenditures to be 

coordinated expenditures, DPA will exceed its coordinated spending limit by 

$10,8218 for Clarke Tucker for Congress. 

7

 The Audit staff previously considered the cost of the pledge cards and walking cards to be an 

independent expenditure. However, DPA indicated in its response to the Interim Audit Report that the 

expenditures were fully coordinated with the candidate and, in consultation with the Office of General 

Counsel, the Audit staff therefore determined that the pledge cards and walking cards could not be 

classified as an independent expenditure. Further, DPA asserts that the pledge cards and walking cards 

(characterized by DPA’s former Director of Operations as “door hangers” in her declaration and as 

“printed materials” in DPA’s Interim Audit Report response) were distributed by volunteers. The Office 

of General Counsel has concluded that, based on this method of distribution, the pledge cards and 

walking cards are not public communications and therefore do not meet the threshold criteria for 

satisfying the content prong of the coordinated expenditure standard (See LRA 1153). Because the 

Commission has been inconsistent on this issue, however, the Office of General Counsel recommended 

referral of this question to the Commission. The Audit staff therefore mentions the pledge cards and 

walking cards here, although their costs is not included in the total dollar amount of this finding. 

8

 This is less DPA’s allowable contribution to the candidate of $5,000 ($15,821 - $5,000 = $10,821). 
17 

third disbursement made to Resonance Campaigns, LLC, as “Printing & 

Postage/Volunteer Exempt Mailing/Clarke Tucker for Congress.” The invoices for 

the two disbursements made to Print for Progress were annotated as “AR-02 

Pledge Cards” and “AR-02 Walk Cards,” while the third invoice for the 

disbursement made to Resonance Campaigns, LLC, was annotated as “Production 

and Design DCC1815 (Qty. 60,969) 8.5x11.” DPA, however, did not provide any 

volunteer documentation or evidence of volunteer involvement to support these 

disbursements. 

The Commission has addressed the applicability of the volunteer materials 

exemption in the Final Audit Reports of the Arizona Republican Party, the 

Democratic Executive Committee of Florida, and the Tennessee Republican Party. 

In these reports, the Commission recognized a lack of clarity regarding the 

application of the volunteer materials exemption. The Commission had attempted 

to formulate a consensus policy regarding what constitutes substantial volunteer 

involvement for the purpose of applying the exemption9

, but this was never 

achieved. Since a lack of clarity exists concerning the application of the volunteer 

materials exemption, it follows that the type and amount of documentation needed 

to support volunteer involvement is also unclear. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with DPA representatives during the exit 

conference and provided a schedule detailing these expenditures. DPA 

representatives stated that “these were not independent expenditures,” that “no 

state party committee has volunteer support for canvassing materials,” and that 

“canvassing materials don’t qualify as public communications.” DPA 

representatives stated they would “work on obtaining volunteer involvement 

support for the Resonance Campaigns expenditure ... but not for the Print for 

Progress canvassing expenditures” because those “two items are not public 

communications.” In response to the exit conference, no additional supporting 

documentation and no further comment was provided. 

As previously discussed in section A.2 above, the Audit staff contends that 

whether the volunteer materials exemption applies does not hinge on the type of 

campaign material a committee uses, but, instead, on how the campaign materials 

are distributed. DPA had not provided evidence of volunteer involvement for 

these expenditures. Prior to determining whether the volunteer materials 

exemption applies to the expenditures, DPA must provide evidence of volunteer 

involvement. 

The Interim Audit Report recommended that DPA provide documentation and 

evidence that apparent independent expenditures totaling $22,803 did not require 

reporting as independent expenditures. Evidence should have included 

documentation such as volunteer sign in sheets, photographs of volunteers 

9

 Proposed Interim Enforcement Policy, Agenda document No. 10-16. 

https://www.fec.gov/resources/updates/agendas/2010/mtgdoc1016.pdf 
 

18 

participating in various duties such as reviewing, sorting and packing the direct 

mail pieces, etc., to support the involvement of volunteer processing or distributing 

the communication. Absent such evidence, the Interim Audit Report 

recommended that DPA amend its reports to disclose the disbursements as 

independent expenditures on Schedule E. 

3. Committee Response to Interim Audit Report

In response to the Interim Audit Report recommendation, DPA submitted a

declaration from its former Director of Operations, as addressed in Part A above.

Due to the lack of a clear standard for applying the volunteer materials exemption,

the Audit staff is unable to determine whether the declaration submitted by DPA

suffices to document the involvement of volunteers for the direct mailers10 . As

such, the Commission will make a determination at the appropriate phase of the

audit process.

C. Failure to File 24-Hour Reports for Apparent Independent Expenditures

1. Facts

In addition to not reporting the apparent independent expenditures totaling $22,803

identified above, DPA did not file any 24-hour reports11, which may have been

required.

2. Interim Audit Report & Audit Division Recommendation

The Audit staff discussed this matter with DPA representatives during the exit

conference and presented a schedule detailing these expenditures. DPA

representatives stated that “these were not independent expenditures,” that “no

state party committee has volunteer support for canvassing materials,” and that

“canvassing materials don’t qualify as public communications.” DPA

representatives stated they would “work on obtaining volunteer involvement

support for the Resonance Campaigns expenditure ... but not for the Print for

Progress canvassing expenditures” because those “two items are not public

communications.” In response to the exit conference, no additional supporting

documentation and no further comment was provided.

As previously discussed in section A.2 above, the Audit staff contends that

whether the volunteer materials exemption applies does not hinge on the type of

campaign material a committee uses, but, instead, on how the campaign materials

are distributed. DPA had not provided evidence of volunteer involvement for

these expenditures. Prior to determining whether the volunteer materials

exemption applies to the expenditures, DPA must provide evidence of volunteer

involvement.

10 See footnote 7 above for discussion of the current treatment of the pledge cards and walking cards. 11 The date the expenditure is publicly distributed serves as the date that the independent expenditure is 

made for purposes of the additional 24-hour report filing requirement. In the absence of a known date 

for public dissemination, the Audit staff used the invoice date of incurrence to determine if a 24-hour 

report was required. 
19 

The Interim Audit Report recommended that, absent documentation that the 

apparent independent expenditures, totaling $22,803, did not require reporting as 

independent expenditures (per Part A above), DPA provide documentation to 

support the date of public dissemination for each mailer to determine whether a 24-

hour report was required to be filed. 

3. Committee Response to Interim Audit Report

In response to the Interim Audit Report recommendation, DPA objected to the

characterization of the expenditures in question as independent expenditures and

stated that the expenditures were “exempt activities and were fully coordinated

with the candidate,” which would negate the requirement to file 24-hour reports.

DPA also submitted a declaration from its Director of Operations, as addressed in

Part A above.

After reviewing DPA’s response to the Interim Audit Report recommendation, and

in consultation with the Office of General Counsel, the Audit staff agrees that the

pledge cards, walking cards, and direct mailers are not independent expenditures.

As such, DPA was not required to file 24-hour reports for these expenditures.

Finding 4. Disclosure of Loans and Loan Repayments 

Summary 

During audit fieldwork, the Audit staff determined that DPA failed to properly disclose 

transactions totaling $32,500 on a line of credit, the correct terms and balances for 

outstanding loans totaling $87,140, and loan repayments of $3,563. DPA did not 

properly disclose the new loans and the terms and balances for outstanding loans on 

Schedules C (Loans) and/or C-1 (Loans and Line of Credit from Lending Institutions). In 

addition, some loan repayments were reported to the incorrect payee on Schedule B, Line 

26 (Loan Repayments) and others were reported with disclosure errors on Schedule C. 

In response to the Interim Audit Report recommendation, DPA corrected the public 

record by filing a Form 99 (Miscellaneous Electronic Submission) which correctly 

disclosed the line of credit, the new and outstanding loans, and the loan repayments. 

Legal Standard 

A. Reporting Loans. All loans received by a committee must be itemized and

continuously reported until repaid. All repayments made on a loan must also be

itemized. 11 CFR §§104.3(a)(4)(iv), (b)(4)(iii) and §104.11.

B. Schedule C. Both the original loan and payments to reduce principal must be

reported each reporting period until the loan is repaid. The committee must report the

following:

• The source of the loan; and

• The type of loan the candidate received (i.e. bank loan, brokerage account, credit

card, or home equity line of credit) either in the first box for endorsers and

guarantors with a notation for loan type or in the box for “Loan Source” after the
20 

candidate’s name. 11 CFR §104.3(d) and §104.11. 

C. Schedule C-1.

1. Loans to Committees. When a committee obtains a loan from a bank or other

permissible lending institution it must also file Schedule C-1 with the first report

due after a new loan or line of credit has been established. The committee must

disclose the following information on Schedule C-1:

• The date and amount of the loan;

• The interest rate and repayment schedule of the loan, or on each draw of line

of credit;

• The type and value of collateral or other sources of repayment that secure the

loan or the line of credit, and whether that security interest was perfected; and

• An explanation of the basis upon which the loan was made, if not made on the

basis of either collateral or other sources of repayment.

2. Loan Agreement/Line of Credit. The committee must also attach a copy of the

loan agreement. In the case of a committee that has obtained a line of credit, a

new Schedule C-l must be filed with the next report whenever the committee

draws on the line of credit. An authorized representative of the lending institution

must sign the statement on Line I. 11 CFR §104.3(d)(l) and (3).

D. Continuous Reporting Required. A political committee must disclose the amount

and nature of outstanding debts and obligations until those debts are extinguished.

52 U.S.C. §30104(b).

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff reviewed bank loans and a line of credit from

Simmons Bank and First National Bank. Based upon a detailed review, the Audit staff

determined the following:

• For the line of credit received from Simmons Bank, DPA made three draws on

the line of credit totaling $32,500 but did not disclose these draws on Schedules

C (Loans) and/or C-1 (Loans and Line of Credit from Lending Institutions). In

addition, DPA reported incorrect payment terms (due date and interest rate) and

an incorrect outstanding balance for this line of credit, which resulted in the

under-reporting of its 2018 year-end line of credit balance by $77,447.12

• For the loan received from First National Bank, the incorrect balance was

disclosed on Schedule C throughout the audit period. The loan was paid off on

12 For this line of credit, DPA carried an outstanding balance on January 1, 2017 of $60,766. In 2017, 

DPA made three draws on the line of credit totaling $32,500, plus an additional draw adding $557 to the 

principal in 2018. DPA made payments of $985 in 2017 and $72,815 in 2018, and this resulted in an 

outstanding balance for the line of credit on December 31, 2018 of $20,023. However, DPA disclosed 

the ending balance for this line of credit to be negative $57,424, which resulted in the under-reporting of 

its 2018 year-end line of credit balance by $77,447 (calculated as $20,023 minus negative $57,424). 
21 

•

March 13, 2017, but DPA continued to incorrectly disclose an outstanding 

balance of $9,693 from July 1, 2017 through December 31, 2018. 

Loan repayments totaling $1,036 to Simmons Bank were reported to the incorrect 

payee (“Simmons First National Bank”) on Schedule B, Line 26, of the 2017 

February Monthly, March Monthly, May Monthly, and July Monthly Reports. 

These loan repayments were also reported on Schedule C to the incorrect payee 

(“First National Bank”) of the 2017 February Monthly, March Monthly, and May 

Monthly Reports, and were not reported on Schedule C of the 2017 July Monthly 

Report. In addition, loan repayments totaling $2,527 to First National Bank were 

reported to the correct payee on Schedule B, Line 26, of the 2017 February 

Monthly and March Monthly Reports, but not reported on Schedule C. 

B. Interim Audit Report & Audit Division Recommendation

The Audit staff discussed this matter with DPA representatives during the exit conference

and provided a schedule detailing the disclosure errors. DPA representatives stated that

they were aware of the disclosure problems and indicated they would amend reports to

correctly disclose the loans and line of credit.

The Interim Audit Report recommended that DPA provide documentation demonstrating 

that the identified draws on the line of credit, as well as the terms and balances for 

outstanding loans, and loan repayments were correctly disclosed. Absent such 

demonstration, the Interim Audit Report recommended that DPA amend its disclosure 

reports or file a Form 99 (Miscellaneous Electronic Submission)5 to disclose the correct 

information on Schedule B, Line 26 (Loan Repayments), Schedule C, and Schedule C-1. 

C. Committee Response to Interim Audit Report

In response to the Interim Audit Report recommendation, DPA filed a Form 99 on

November 2, 2021, which correctly disclosed the terms and transactions on a line of

credit received from Simmons Bank totaling $32,500, in addition to the correct terms and

balances for outstanding loans totaling $77,447. The Form 99 correctly disclosed the

terms that appear on Schedule C and Schedule C-1, the cumulative payment and the

outstanding amount at the close of the period that corrected the public record for both

Schedule C and Schedule C1. DPA’s Form 99 did not correct an outstanding balance

discrepancy of $9,693 for the loan received from First National Bank and did not address

the loan repayments totaling $1,036 to Simmons Bank or the loan repayments totaling

$2,527 to First National Bank. Subsequently, on January 14, 2022, DPA filed a revised

Form 99 which correctly disclosed the line of credit, the new and outstanding loans, and

the loan repayments.
 

el 

el 

FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

MEMORANDUM 'HFHPEHU23

TO: Patricia C. Orrock 

Chief Compliance Officer 

Dayna C. Brown 

Assistant Staff Director 

Audit Division 

Lorenzo Holloway 

Assistant General Couns 

Compliance Advice 

FROM: Neven Stipanovic 

Associate General Couns 

Policy Division 

Counsel 

Counsel 

Danita Alberico 

Attorney 

SUBJECT: Draft Final Audit Report on the Democratic Party of Arkansas (LRA 1153) 

I. INTRODUCTION

The Office of the General Counsel has reviewed the Draft Final Audit Report (“DFAR”) 

on the Democratic Party of Arkansas (“Committee”). The DFAR contains four findings: (1) 

Reporting of Debts and Obligations; (2) Recordkeeping for Employees; (3) Reporting of 

Apparent Independent Expenditures; and (4) Disclosure of Loans and Loan Repayments. We 

comment on Finding 3, and otherwise concur with the findings. If you have any questions, 

please contact Danita Alberico, the attorney assigned to this audit. 

II. REPORTING OF APPARENT INDEPENDENT EXPENDITURES (Finding 3)

The DFAR concludes that disbursements totaling $22,803, reported by the Committee as

Federal Election Activity1

 paid entirely with federal funds, should have been reported instead as 

“Federal Election Activity” includes specific types of activities engaged in by a state party committee 

during specific time frames, public communications containing specific content, or activities consuming more than a 

1 
Comments on the Draft Final Audit Report 

Democratic Party of Arkansas (LRA 1153) 

Page 2 

independent expenditures because the communications expressly urged the election of a clearly 

identified federal candidate. 11 C.F.R. §§ 100.16, 100.22(a). These disbursements were for 

direct mail pieces through Resonance Campaigns totaling $18,423.97 and printed materials 

(characterized by the Committee as door hangers) totaling $4,378.53. 

In response to the Interim Audit Report (“IAR”), which contained the same conclusion, 

the Committee disagrees with the classification of both the Resonance Campaign direct mailer 

and the door hangers as independent expenditures, asserting that it fully coordinated its activities 

with respect to these expenditures with the candidate. Despite this conceded coordinated 

activity, and specifically with respect to the door hangers, the Committee also contends that the 

door hangers nevertheless do not qualify as coordinated party expenditures because door hangers 

are not a “public communication” as that term is defined in 11 C.F.R. § 100.26.2

 Finally, the 

Committee states that in any event the door hangers were distributed by volunteers, that the 

production and preparation of the Resonance Campaign direct mailers included substantial 

volunteer participation, and therefore that both qualify for the volunteer materials exemption 

(“VME”). The Committee submitted a declaration from its executive director, in which she 

recalls that the door hangers and Resonance Campaign direct mailers involved volunteer activity 

in accordance with the pertinent regulatory requirements. The declaration is submitted “under 

penalty of perjury.” 

Commission regulations define an “independent expenditure,” in pertinent part, as an 

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

candidates for federal office that is not made in cooperation, consultation, or concert with, or at 

the request or suggestion of, a candidate. 11 C.F.R. § 100.16(a). A communication is “made in 

cooperation, consultation, or concert with, or at the request or suggestion of, a candidate” if it is 

a coordinated communication under 11 C.F.R. § 109.21 or a party coordinated communication 

under 11 C.F.R. § 109.37. Id. In no event, however, may a communication be an independent 

expenditure “if the person making the expenditure allows a candidate, a candidate’s authorized 

committee, or their agents . . . to become materially involved in decisions regarding the 

communication . . . or [to share] financial responsibility for the costs of production or 

dissemination with any such person.” Id. § 100.16(c). 

Given the Committee’s assertion that it fully coordinated the distribution of the door 

hangers and the Resonance Campaign direct mailers with the candidate, we do not believe that 

the door hangers and direct mailers may continue to be classified as independent expenditures. 

Although the Committee does not elaborate on the nature of the coordination involved, its 

statement that the door hangers and direct mailers were “fully coordinated” with the candidate 

implies that the candidate was materially involved in the decision-making process regarding the 

specific percentage of an employee’s time in a given month. 52 U.S.C. § 30101(20); 11 C.F.R. § 100.24. A state 

party committee must pay for the costs of such activities exclusively with federal funds, subject to certain 

exceptions. 52 U.S.C. § 30125(b); 11 C.F.R. § 300.32(a)(2). 

A “public communication”, in pertinent part, means “a communication by means of any broadcast, cable, 

or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to 

the general public, or any form of general public political advertising.” 11 C.F.R. § 100.26. See also 52 U.S.C. 

§ 30101(22). 

2 
Comments on the Draft Final Audit Repo11 

Democratic Party of Arkansas (LRA 1153) 

Page 3 

door hangers and direct mailers. 11 C.F.R. § 100.16(c). We therefore recommend that the Audit 

Division revise Finding 3 to state that the disbursements for the door hangers and Resonance 

Cam aion direct mailers should not be classified as inde endent ex enditures. See 

conclusion). 

We also agree with the Committee that the door hangers at issue in the finding cannot be 

classified as a coordinated communication under 11 C.F.R. § 109.21 or as a party coordinated 

communication under 11 C.F.R. § 109.37. To qualify as a coordinated communication or a party 

coordinated communication, a communication must, among other things, be either an 

electioneering communication or a public communication as that te1m is defined in 11 C.F.R. § 

100.26. 11 C.F.R. §§ 109.2l (c)(l), 109.37(a)(2). The door hangers are not an electioneering 

communication because they are not a broadcast, cable, or satellite communication. 52 U.S.C. § 

30104(f)(3)(A); 11 C.F.R. § 100.29(a). 

With respect to the question of whether door hangers may be a public communication, we 

previously concluded in the ne ative and we reiterate the rationale and conclusion from that 

revious audit here. See 

(palm 

cards and door hangers). In those comments, we noted that the subject palm cards and door 

hangers were not distributed by any of the means set fo11h in 11 C.F.R. § 100.26. Id. Fluther, 

the Commission has explained that the various means of mass communication encompassed by 

the public communication definition all lend themselves to the distribution of content through an 

entity ordinarily owned or controlled by another person. See Internet Communications, 71 Fed. 

Reg. 18,589, 18,594 (Apr. 12, 2006) ("Thus, for an individual to communicate with the public 

using any of the fo1ms of media listed by Congress, he or she must ordinarily pay an 

inte1mediary (generally a facility owner) for access to the public through that fonn of media each 

time he or she wishes to make a communication."). Distribution of a door hanger by hand does 

not require payment to an intermediate facility owner each time communication with an audience 

is sought (though payment to a printer for the creation of the door hanger may be required), but 

rather may be accomplished independently by the communicator. A door hanger is therefore 

more akin to a printed slate card, handbill, brochure, or bmnper sticker than it is to any of the 

communication modalities enlllllerated in the definition of public communication. 3 

At the same time, we note that the Commission has been inconsistent in its treatment of 

door hangers in previous enforcement matters. In several matters, the Commission concluded 

that door hangers should be treated as public communications. See MUR 6778 (David Hale for 

Congress), Factual and Legal Analysis, at 3 (undated, circa Nov. 5, 2015); MUR 6924 (Andrew 

Winer), Factual and Legal Analysis, at 5 n.26 (Aug. 21, 2017). See also MUR 4643 (Democratic 

3 See, e.g., 11 C.F.R. §§ 100.140 (slate card exemption), 100.147 (VME for party committees), which 

expressly distinguish communications covered by the exemption from modes of public communication that are not. 

11 C.F.R. §§ 100.140 (exception shall not apply to costs inctmed respecting listings made on broadcasting stations, 

newspapers, magazines, and similar types of general public political advertising), 100 .14 7 (a) ( exemption not 

applicable to broadcasting, newspaper, magazine, billboard, direct mail, or similar type of general public 

communication or political adve11ising). 
Comments on the Draft Final Audit Report 

Democratic Party of Arkansas (LRA 1153) 

Page 4 

Party of New Mexico), Letter to Allen Weh from Jonathan Bernstein (June 23, 2005) (advising 

of Commission’s entry into Consent Judgment with respondent and enclosing Order and 

Judgment, United States District Court of New Mexico, Civil No. 02-0372 MCA/RHS (Apr. 29, 

2005), Paragraph A of which notes disbursements from non-federal account for “public 

communications;” communications at issue in enforcement matter included some door hangers). 

In another enforcement matter, however, the Commission concluded that a door hanger was not a 

public communication because it qualified as a handbill subject to the “coattails exemption” (11 

C.F.R. § 100.148). See MUR 6673 (Lee), Factual and Legal Analysis, at 5 (Sept. 13, 2013).4 

Considering the above history, we recommend that the Audit Division raise the question 

of whether the door hangers are a public communication in the cover memorandum that will 

accompany the transmission of the DFAR to the Commission. 

Regarding the VME and the sufficiency of the declaration, we note that the Commission 

has divided over the question of whether unsworn written assertions suffice in the absence of 

documentation of the nature and extent of volunteer involvement. See Final Audit Report on 

Nebraska Democratic Party, at 19-20 (approved Oct. 23, 2014). Here, as noted above, the 

declaration of the director of operations was submitted under penalty of perjury. It is therefore 

somewhat stronger insofar as it may carry the same weight as a sworn statement. 28 U.S.C. § 

1746 (unsworn declaration subscribed as true under penalty of perjury supports matter “with like 

force and effect” as sworn declaration or affidavit). However, in that the declaration is not 

accompanied by documentation of the nature and extent of volunteer involvement, it is arguably 

akin to the unsworn statement at issue in the Nebraska Democratic Party audit. Further, the basis 

upon which the director of operations’ recollection is premised, whether upon personal 

knowledge or not, is not clear. We have recommended in the past that even affidavits bearing 

such uncertainties be raised for Commission consideration. See Memorandum from Lisa J. 

Stevenson to Patricia C. Orrock, Draft Final Audit Report on the New York Republican Federal 

Campaign Committee (LRA 1038), at 4 (July 7, 2017); Memorandum from Adav Noti to Patricia 

C. Orrock, Draft Final Audit Report on the Illinois Republican Party (LRA 1006), at 4-5 (Jan. 

31, 2017). We therefore do so again here, recommending that the question be raised in the cover 

memorandum that will accompany the transmission of the DFAR to the Commission. 

The Commission has also divided over the question of whether the broader category of “door to door 

canvassing” constitutes a public communication. See, e.g., MUR 5564 (Alaska Democratic Party), Statement of 

Reasons of Chairman Robert D. Lenhard, at 3-4 (Dec. 31, 2007) and Statement of Reasons of Vice Chairman David 

M. Mason and Commissioner Hans A. von Spakovsky, at 8-10 (Dec. 21, 2007); Advisory Opinion 2016-21 (Great 

America PAC), at 4 n.3 (Commission could not agree on whether door to door canvassing is public communication); 

Advisory Opinion 2016-21 (Great America PAC), Concurring Statement of Vice Chair Caroline C. Hunter and 

Commissioners Lee E. Goodman and Matthew S. Petersen (concluding door to door canvassing not public 

communication). See also MUR 7521 (Swing Left), Factual and Legal Analysis, at 7 n.34 (Oct. 6, 2021) 

(unnecessary to decide whether door to door canvassing is public communication considering minimal cost of 

communication at issue). 

4 
 

 

 

 

 

el

FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

 March 30, 2022 

MEMORANDUM 

TO: Patricia C. Orrock 

Chief Compliance Officer

 Dayna C. Brown 

Assistant Staff Director 

Audit Division 

FROM: Neven F. Stipanovic 

Associate General Couns 

Policy Division 

Jessica Selinkoff 

Acting Assistant General Counsel 

 Compliance Advice 

Danita Alberico 

Attorney 

unsel

vice 

SUBJECT: Audit Division Recommendation Memorandum on the Democratic Party of 

Arkansas (LRA 1153) 

I. INTRODUCTION 

The Office of General Counsel (“OGC”) did not initially comment on the Audit Division 

Recommendation Memorandum (“ADRM”). We now, however, provide ADRM comments 

upon revisiting our analysis of the Draft Final Audit Report (“DFAR”) regarding whether door 

hangers that the Democratic Party of Arkansas (“the Committee”) distributed should be 

classified as coordinated party expenditures in Finding 3, Reporting of Media Related 

Expenditures.1

 In OGC’s DFAR comments, we concluded that the door hangers cannot be 

See Memorandum from Neven Stipanovic to Patricia C. Orrock, Draft Final Audit Report on the 

Democratic Party of Arkansas (LRA 1153) (Dec. 23, 2021) (“DFAR Comments”). 

1 
 

 

 

 

 

Comments on the Audit Division Recommendation Memorandum 

Democratic Party of Arkansas (LRA 1153) 

Page 2 

classified as party coordinated communications under 11 C.F.R. § 109.37 because they are not 

“public communications” under 11 C.F.R. § 100.26.2  

For the reasons discussed below, we are revising this conclusion. We now conclude that 

door hangers that qualify as exempt under the volunteer materials exemption (“VME”)3

 should 

be excluded from classification as party coordinated expenditures, but that door hangers that are 

not exempt VME likely are public communications and, therefore, party coordinated 

expenditures. We therefore recommend that the Audit Division include the cost of the door 

hangers in Finding 3, Reporting of Media Related Expenditures, pending the Commission’s 

resolution of the question of whether the Committee’s documentation suffices to meet the VME. 

Because we are revising our conclusion, we further recommend that the Audit Division 

notify the Committee of this changed analysis and provide an opportunity for the Committee to 

submit written comments if it wishes to do so. 

II. REPORTING OF MEDIA RELATED EXPENDITURES (Finding 3) 

A payment by a political party committee for a communication that is coordinated with a 

candidate, i.e., a party coordinated communication, must be treated as an in-kind contribution to 

that candidate or as a party coordinated expenditure, unless that payment is “otherwise exempted 

under 11 C.F.R. part 100, subpart C or E.” 11 C.F.R. § 109.37(b). Payments for campaign 

materials within the VME are such “otherwise exempted” payments in 11 C.F.R. part 100, 

subparts C and E. Thus, if the door hangers, which the Committee asserts were “fully 

coordinated” with a candidate, qualify for the VME, they cannot be party coordinated 

expenditures. 

The VME exempts from the definitions of “contribution” and “expenditure” payments for 

“campaign materials (such as pins, bumper stickers, handbills, brochures, posters, party tabloids 

or newspapers, and yard signs)” distributed by a state or local party committee in connection 

with volunteer activities on behalf of a federal candidate of that party, provided other 

requirements are met.4

 Although the Commission does not appear to have specifically analyzed 

whether door hangers are “campaign materials” within the meaning of the VME,5 it has 

determined that door hangers may be included within another exemption in 11 C.F.R. part 100, 

2 DFAR Comments at 2-4. 

3 See 52 U.S.C. § 30101(8)(B)(ix), (9)(B)(viii); 11 C.F.R. §§ 100.87, 100.147. 

4 11 C.F.R. §§ 100.87, 100.147. The VME does not apply for the “cost incurred in connection with any 

broadcasting, newspaper, magazine, billboard, direct mail, or similar type of general public political advertising.” 

11 C.F.R. §§ 100.87, 100.147. 

5 But cf. Advisory Opinion 2008-06 (Democratic Party of Virginia) at 4, 5 (concluding, without further 

analysis, that “[t]he types of campaign materials covered by this [VME] exemption include all manner of 

publications, including the publications proposed by the Committee,” which, as noted in an analysis of a different 

exemption, for slate cards, might possibly include a door hanger version of a slate card). 
 

 

 

 

 

Comments on the Audit Division Recommendation Memorandum 

Democratic Party of Arkansas (LRA 1153) 

Page 3 

subparts C and E, for payments for campaign materials. In MUR 6673 (David Lee for 

Supervisor 2012), the Commission concluded that a door hanger paid for by a local candidate 

and distributed by volunteers qualified for an exemption similar to the VME, the “coattails 

exemption.”6

 The coattails exemption and the VME use identical language to describe the 

“campaign materials” within the scope of the respective exemptions.7 For this reason and 

because the exemptions operate similarly, we conclude that it is appropriate to extend the 

Commission’s determination, in MUR 6673, that door hangers can be campaign materials within 

the coattails exemption to include door hangers within the meaning of “campaign materials” in 

the VME. 

Thus, if the Committee otherwise satisfies the requirements of the VME (e.g., by 

sufficient documentation of volunteer dissemination of the door hangers), we further conclude 

that, under 11 C.F.R. § 109.37, the VME-qualified door hangers cannot be classified as a party 

coordinated expenditure and the amount of that payment should not be included in Finding 3. 

Assuming, arguendo, that the Committee’s documentation is insufficient to establish that the 

door hangers are exempt under the VME, the determination of whether the door hangers should 

be included in Finding 3, Reporting of Media Related Expenditures, will depend upon whether 

the door hangers are public communications.8

 We conclude that, if the door hangers are not 

exempt under the VME, they likely are public communications and party coordinated 

expenditures. 

The Commission’s conclusion in MUR 6673 that a door hanger within the coattails 

exemption is not a “public communication” was limited to the facts at issue in that MUR; the 

Commission did not determine that no door hanger is a public communication as a matter of 

law.9

 In fact, as OGC explained in its DFAR comments, the Commission, after deciding MUR 

6673, concluded in two enforcement matters not implicating exempt activity under 11 C.F.R. 

6 Factual and Legal Analysis at 5-6, MUR 6673 (David Lee for Supervisor 2012) (Sept. 13, 2013) (“Lee 

F&LA”) (concluding that, because the door hanger was a type of “handbill” meeting the requirements of the coattail 

exemption, it was not a public communication subject to soft money restrictions in the statutory provision now 

codified at 52 U.S.C. § 30125(f)); see also 11 C.F.R. §§ 100.88, 100.148 (coattails exemptions, exempting from 

definitions of “contribution” and “expenditure” certain payments by candidates for campaign materials used in 

connection with volunteer activity). 

7 Compare 11 C.F.R. §§ 100.87, 100.147 (VME use of “campaign materials”) with 11 C.F.R. §§ 100.88, 

100.148 (coattails exemption use of “campaign materials”). 

8 See DFAR Comments at 4 (discussing VME evidence); see also id. at 2-3 (describing payment, express 

advocacy content, and representation of coordination conduct that appear to adequately address other requirements 

of 11 C.F.R. § 109.37). 

9 See Lee F&LA at 5 (explaining that a handbill is not a public communication if “at the least” it qualifies for 

the coattails exemption); id. at 5 n. 5 (acknowledging an earlier enforcement matter, MUR 5604 (Friends of William 

D. Mason), in which three Commissioners concluded that handbills that qualify for coattails exemption are not 

public communications and three Commissioners concluded that no handbills are public communications). 
Thus, we recommend that the Audit Division include the cost of the door hangers in 

Finding 3, Reporting of Media Related Expenditures, because the door hangers, if not within the 

VME, are likely public communications that otherwise meet the definition of “party coordinated 

communication” in 11 C.F.R. § 109.37.13 

Comments on the Audit Division Recommendation Memorandum 

Democratic Party of Arkansas (LRA 1153) 

Page 4 

part 100, subpart C or E, that door hangers are public communications.10 Although the 

Commission did not analyze the regulatory definition of “public communication” and that 

definition’s use of the phrase “general public political advertising”11 in reaching those 

conclusions, the Commission has analyzed the treatment of door hangers as “general public 

political advertising” in an enforcement matter, MUR 4741 (Bono), that pre-dates the “public 

communication” definition. In MUR 4741, which concerned door hangers not claimed to be 

exempt activity under 11 C.F.R. part 100, subpart C or E, the Commission concluded that a door 

hanger is a form of general public political advertising, as that phrase was then used (and is still 

used) in the statutory disclaimer provision now codified at 52 U.S.C. § 30120(a), in part because 

“the doorhanger was distributed to the general public at their place of residence, . . . just as if 

they had received it in the mail.”12 

10 DFAR Comments at 3 (citing Factual and Legal Analysis at 3, MUR 6778 (David Hale for Congress) and 

Factual and Legal Analysis, at 5 n.26, MUR 6924 (Andrew Winer)). 

11 See 11 C.F.R. § 100.26 (defining “public communication”, in pertinent part, as “a communication by means 

of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass 

mailing, or telephone bank to the general public, or any other form of general public political advertising”); see also 

52 U.S.C. § 30101(22) (defining “public communication” and including same “general public political advertising” 

phrase). 

12 Factual and Legal Analysis, at 4-5, MUR 4741 (Bono) (Jan. 19, 1999). OGC, at the time of its DFAR 

comments, was not aware of and did not cite MUR 4741. In the DFAR comments, without benefit of specific 

precedent analyzing non-VME door hangers as “general public political advertising,” OGC reached its conclusion 

that door hangers are not “public communications,” in part, on the basis of the Commission’s explanation of 

revisions to the “public communication” definition to include some internet communications. See DFAR Comments 

at 3 (citing Internet Communications, 71 Fed. Reg. 18,589, 18,594 (Apr. 12, 2006) (“Internet E&J”)). In the DFAR 

comments, OGC focused on the Internet E&J’s explanation of the relation between the “catch-all” category of 

“general public political advertising” and the enumerated communications included in the statutory “public 

communication” definition now codified at 52 U.S.C. 30101(22). See id.; see also Internet E&J, 71 Fed. Reg. at 

18,592, 18,594 (referring to the “catch-all”). In light of the more specific analysis regarding door hangers in MUR 

4741, OGC finds the couching language in the Internet E&J on which we previously relied — e.g., that each of the 

enumerated communication forms “lends itself to distribution . . . through an entity ordinarily owned or controlled 

by another person” and that a person “must ordinarily pay an intermediary (generally a facility owner) for access to 

the public” — less persuasive in this context. See Internet E&J, 71 Fed. Reg. at 18,594 (emphasis added). 

13 We recommend further that the determination that the door hangers likely are public communications if 

they do not qualify as exempt under the VME be referred to the Commission for its consideration.