FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

STATEMENT OF CHAIR ELLEN L. WEINTRAUB AND 

COMMISSIONERS CYNTHIA L. BAUERLY AND STEVEN T. WALTHER 

AUDIT OF MCCAIN-PALIN 2008, INC. 

AND MCCAIN-PALIN COMPLIANCE FUND, INC. 

One of the most critical issues on which the Ckimmission deliberated during its 

audit of McCain-Palin 2008, Inc., will not even be mentioned in tfae Commission's Final 

Audit Report - tfae issue of so called "Hybrid Communications." 

Hybrid Communications are communications made by a political party (1) that 

refer to one or more clearly identifred Federal candidates and (2) that also generically 

refer to otfaer candidates of a political party without clearly identifying fhem. How 

political party coinmittees sfaould attribute disbursements for Hybrid Communications 

faas been a perennial issue for tfae Commissicm, and was most recentiy addressed in 

relation to radio and television advertisements run during tfae 2004 Presidential election.^ 

In June of 2011, wfaen tfae Audit Division frrst circulated its Preliminary Audit 

Report on McCain-Palin 2008, Inc. (tfae 'TAR") to tfae Conunission for approval, tfae 

report did not include a proposed frnding related to Hybrid Communications. 

Nevertheless, the issue was raised and adciressed by Commission staff in three separate 

instances: (1) the Audit Division's cover memo to the PAR; (2) the Office of G^ieial 

Counsel's legal analysis memo (see Attachment 1 to the P ^ at pages 14-19); and (3) 

Attachment 2 to the PAR showing what a Hybrid Communications finding v/ovld look 

like, had it been included in the PAR (see Attachment 2 to the PAR at pages 3-5, which 

we have attached hereto). 

' See Final Audit Report on Bush-Cheney *04, Inc. and tiie Bush-Cheney *04 (^mpliance Committee, Inc. 

and Final Audit Report on Keny-Edwards 2004, Inc. and the Kerry-Edwards 2004 Inc. General Election 

Legal and Accounting Compliance Fund, both available at www.fec.gov/audits/audit reports pres.shtml. 

See also Statement of Chainnan Robert D. Lenhard and Commissions Steven T. Walther and Ellea L. 

Weintraub Audit of Bush-Cheney '04, Inc., available at 

www.fec.gov/audits/2004/20070322bush chenev stmt 03.pdf The Commission also addressed Hybrid 

Communications in tfae context of mass mailings in Advisory Opinion 2006-11 (Washington Democratic 

State Central Committee), available at www.fec.yov/searchao. 
Statement of Reasons of C3iair Weuitraub and Commissioners Bauerly and Wahher 

Final Audit on McCam-Palm 2008, Inc. and McCain-Falin Complhmce Fund, Inc. 

In the attac^ents to tfae PAR, tfae staff explained tfaat the Rqpublican National 

Conunittee C*RNC") and McCain-Palin 2008, Inc. had jointiy spent $61,498,018 on 

Hybrid Communications related to the general election and that they faad split tfae cost of 

tfae conununications evenly (50/50) between them. Accordingly, based on tfae agreedupon allocation, the RNC spent $30,749,009 on Hybrid Communications without treating 

any of this spending as coorduiated party commimications,^ and witfaout applying any of 

tfae spending against McCain-Palin 2008, faic's expenditure limitation.^ 

Even tfaougfa the Audit Division did not include a proposed finding related to 

Hybrid Communications in its draft of the PAR, on August 30,2011, tfae Commission 

voted on a motion by then-Commissioner Wemtraub "to direct tfae Audit Division to 

include in tfae Preliminary Audit Report a finding regarding tfae Hybrid Coinmunications 

issue discussed in Attachment 2... and to provide [McCain-Palui 2008, Inc.] witfa tfae 

opportunity to respond to the frnding." ^ We supported that motion, but it failed to 

receive tfae four affirmative votes necessary for (Commission approval, so tfae PAR did 

not include the finding. As a result, the issue of Hybrid Communications appeared 

nov^ere in tfae PAR tiiat was sent to McCain-Palin 2008, Inc.,^ nor will it appear 

anywfaere in tfae Final Audit Report. 

Nevertfaeless, we write tfais statement now to make clear that, despite its 

unfortunate absence in tfae PAR and in tfae Final Audit Report, the issue of how political 

party committees attribute disbursements for Hybrid Coinmunications remains of 

paramount concern.^ 

^ Each national party committee had a coordinated spending limit of $19,151,200 for its 2008 general 

election candidate. See 2 U.S.C. § 441a(d) (coordinated spending lunit). Sq)arate from the Hybrid 

Communications at issue hoe, die KNC had already applied expenditures toteling SI 8,834,336 toward its 

coordinated spending limit. 

3 Because McCain-Palin 2008, Inc. accepted public fimds of $84,103,800 under the Presidential Biection 

Campaign Fund Act, 26 U.S.C. § 9001, et seq., the campaign had agreed to a spending limit of tiie same 

amount. 

* See Certification m Preliminary Audit Report on McC^-Palin 2008, Inc. and McCain-Palin C>>mpliance 

Fimd, dated August 30,2011 (then-Chair Bauerly and Commissioners Wahher and Weintraub voted in fevor of 

fhe motion and tiien-Vioe-Giair Hunter and Commissioners McGahn and Petersen voted against the motion). 

^ On Septembw 27,2011, the Commission unanimously approved a motion to *'[a]t tiie conclusion of tiie 

audit, place tfae cover memo to die PAR and the attachments on the public record.** These materials are 

avaiUa>le at www.fec.gov/audits/audit yeports pre8.shtml. 

^ At the (^mmission*s December 6,2012, open meeting, tiien-Vice Chair Weintraub informed 

rqiresentatives of McCaui-Palin 2008, Inc. who were present at tiie meeting, about our concerns with the 

Hybrid Communications at issue here. An audio archive of the O>mmission*s December 6,2012, open 

meeting is available at www.fec.gov/ayenda/2012/agaida20121206.shtml. 

Page 2 of3 
StatMient of Reasons of C^hair Weintraub and (Commissioners Bauerly and Wallfaer 

Final Audit on McCaui-Palm 2008, Inc. and McCain-Palin Compliance Fund, Inc. 

A finding regarding Hybrid Communications should have been included in tfae 

PAR, wfaich would faave given McCain-Palin 2008, Inc. a chance to respond and the 

Commission the opportunity to give tfais issue tfae frill consideration it deserves. 

Date 

9il |^&/3 

Site ' 

Date 

Ellen L. Weinttaub 

Cfaaur 

Steven T. Walther 

Commissioner 

Page 3 of3 
Atttichment 2 

Page 3 of 5 

Hybrid Communications 

Summary 

The Republican National Committee spent $30,749,009 on hybrid media ad 

communications related to the General election that were not applied to the coordinated 

spending limitation or the Generai Committee's spending limitation. Excessive in-kind 

contributions resulting from hybrid communications did not receive the four afrirmative 

votes necessary for a fmding in the audit reports of both 2004 general election candidates. 

Therefore, the following facts are provided for informational purposes only. 

Legal Standard 

A. Allocation of Expenses for Political Party Committee Phone Banks. Allocation of 

expenses for political party committee phone banks that refer to a clearly identified 

Federal candidate can be paid 50 percent by the Federal candidate and 50 percent by the 

national party with Federal funds subject to the limitations, restrictions and requirements 

of 11 CFR 109.32 and 109.33 without coordination if: 

(1) The communication refers to a clearly identified Federal candidate; 

(2) The communication does not refer to any other cleariy identified Federal or nonFederal candidate; 
Atttichment 2 

Page 4 of 5 

(3) The communication includes another reference that generically refers to other 

candidates of the Federal candidate's party without clearly identifying them; 

(4) The communication does not solicit a contribution, donation, or any other funds 

from any person; and 

(5) The phone bank is not exempt from the definition of "contribution" under 11 CFR 

100.89 and is not exempt from the definition of "expenditure" under 11 CFR 

100.149. 11 CFR §106.8. 

B. Coordinated Party Expenditures in Presidential Elections. 

(1) The national committee of a political party may make coordinated party 

expenditures in connection with the general election campaign of any candidate for 

President of the United States affiliated with the party. 

(2) The coordinated party expenditures shall not exceed an amount equal to two cents 

multiplied by the voting age population of the United States, 11 CFR 110.18. This 

limitation sfaall be increased in accordance with 11 CFR 110.17. 

(3) The coordinated party expenditures shall be in addition to: 

• Any expenditure by a national committee of a political party serving as the 

principal campaign committee of a candidate for President of the United 

States; and 

• Any contribution by the national committee to the candidate permissible under 

11 CFR llO.l or 110.2. 

(4) Any coordinated party expenditures made by the national committee of a political 

party pursuant to paragraph (a) of this section or made by any other party 

committee under authority assigned by a national committee of a political party 

under 11 CFR 109.33, on behalf of that party's Presidential candidate shall not 

count against the candidate's expenditure limitations under 11 CFR 110.8. 11 

CFR § 109.32(a). 

C. Expenditure Limitation for President. The national party committees have an 

expenditure limitation for their general election nominee for President. The formula used 

to calculate the Presidential expenditure limitation considers not only the price index but 

also the total state voting-age population (VAP) of the United States. The Department of 

Commerce also publishes the total VAP ofthe United States annually in the Federal 

Register. 11 CFR §110.18. 

The formula used to calculate this expenditure is two cents multiplied by the total VAP of 

the United States (227,719,424), multiplied by the price index. Amounts are rounded to 

the nearest $100. 2 U.S.C. §441a(d)(2) and 11 CFR §109.32(a). Based upon this fonnula, 

the expenditure limitation for 2008 Presidential nominees is $19,151,200. Federal 

Register/Vol. 73, No. 31/Thursday, February 14,2008/Notices. 

Facts and Analysis 

A. Facts 

The Republican National Committee (RNC) spent $30,749,009 on its sfaare of media ads 

considered to be "hybrid communications." Such communications referenced Senator 

John McCain or his general election opponent, then-Senator Barack Obama, and made 
Attachment 2 

Page 5 of 5 

references to one ofthe two major parties. These hybrid communications were paid 50/50 

between the RNC and the General Committee. The General Committee's portion of the 

hybrid expenditures (50 percent) was applied to the spending limitation. The RNC's 

portion of the hybrid expenditures (50 percent) was not applied to its coordinated 

spending limit (2 U.S.C. §441a(d)). 

National party committees each had a coordinated spending limit of $19,151,200 for their 

respective 2008 general election candidates. As noted below, the RNC applied 

expenditures totaling $18,834,336 toward its coordinated spending limit. Therefore, 

without applying any costs associated with hybrid communications, the RNC had 

$316,864 remaining under the coordinated spending limitation for Senator McCain's 

presidential campaign. 

441a(d) Coordinated Activitv: 

Media Ads $11,262,437 

Calls/Surveys $1,559,472 

Consultant Travel/Other $ 178,409 

Printed Mailers/Postage $5,648,706 

Campaign Accessories $135,048 

Media Radio Buys $50.264 

Total 441a(d) Coordinated $18,834,336 

B. Spending Limitation Analysis 

The General Committee accepted public funds of $84,103,800 and therefore agreed to a 

spending limitation of the same amount, if the Commission were to consider the RNC's 

portion of hybrid communications as in-kind contributions to the General Committee by 

the RNC, then an excessive in-kind contribution totaling $30,432,145 ($30,749,009 -

$316,864) would result since the RNC had spent more than its 44la(d) limitation. The 

potential excessive amount received by the General Committee would be repayable to the 

U.S. Treasury. It is noted that possible excessive in-kind contributions resulting from 

hybrid communications did not receive the four affirmative votes necessary for a finding 

in the audit reports of both 2004 presidential candidates in the general election.