FEDERAL ELECTION COMMISSION 

WJ\SHINC;TON, D.C 20463 

MEMORANDUM 

TO: Patricia C. Orrock 

FROM: 

Chief Compliance Officer 

'Thomas E. Hintermistcr 

Assistant Staff Director 

AdavNoti /W 

Acting Associate General Counsel 

Policy Division 

Lorenzo 

Assistant 

Holloway 

General Couns~V 

~ 

-

for Compliance Advice 

Danita Alberico I.I}. -/"(I if}A 

Attorney 

'JUL 28 2016 

SUBJECT: Draft Final Audit Report - Conservative Campaign Committee (LRA 996) 

I. INTRODUCTION 

The Office of General Counsel has reviewed the Draft Final Audit Report ("DF AR") on 

the Conservative Campaign Committee ("Committee"). We concur with the findings in the 

DFAR: Reporting of Apparent Independent Expenditures (Finding I) and Recordkeeping for 

Communications (Finding 2). We comment here only to provide our reasons for concluding that 

it is legally appropriate to rely upon 11 C.F.R. § 104.14(b)(I) in support of Finding 2. If you 

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

II. RECORD KEEPING FOR COMMUNICATIONS (Finding 2) 

This finding concerns apparent communication-related expenses totaling $357,998 that 

the Committee reported as operating expenditures. The finding concludes that the 

documentation provided by the Committee relating to these expenses was insufficient to enable 

the Audit staff to determine whether this categorization was correct, or whether some or all of 

the expenses should have been reported as independent expenditures. 
Comments on the Draft Final Audit Report 

Conservative Campaign Committee (LRA 996) 

Page 2 

We concur with this finding. The basis for the finding is 11 C.F.R. § 104.14(b)(J). This 

regulatory provision requires reporting committees to "[m]aintain records, including bank 

records, with respect to the matters required to be reported, including vouchers, worksheets, 

receipts, bills and accounts, which shall provide in sufficient detail the necessary information and 

data from which the filed reports and statements may be verified, explained, clarified, and 

checked for accuracy and completeness" (emphasis added). 11 C.F.R. § 104.14(b)(J). 

Although the text of this regulation lists only certain types of financial documents, and 

does not specifically mention communication scripts, the authority of the regulation is not 

confined to the mentioned documents alone. The regulation does not define the "records" that a 

committee is required to maintain so narrowly. Rather, the committee is required to maintain 

records, "including" bank records, which, in turn, "includ[e]" the kinds of financial documents 

listed in the text. 11 C.F .R. § I 04. l 4(b )(I). When a statutory or regulatory definition of terms 

"includes" certain items, the otherwise applicable canon of construction, expressio unius est 

exclusio alterius, generally does not apply. See 2A Norman J. Singer, Suther/and Srat. Const., 

§ 47.25 (7th ed. 2014) ("The word "include" in a statute generally signals that entities not 

specifically enumerated are not excluded."). See also, e.g., White v. National Football League, 

756 F.3d 585, 595 (8th Cir. 2014); Jones v. American Postal Workers Union, 192 F.3d 417, 426 

(4th Cir. 1999). Thus, the mere mention of certain kinds of documents in section I 04. I 4(b)(l) 

does not exclude other kinds of documents from its scope. 

The Commission has not interpreted this provision so narrowly as to exclude other kinds 

of documents. For example, in an advisory opinion that addressed the extent to which the 

Commission's personal use regulation, 11 C.F.R. § 113.l(g)(l)(i)(H), would allow salary 

payments to a member of a candidate's family, the Commission indicated that the committee 

would be required to maintain a copy of the committee's employment contract with the family 

member and other documentation relating to the family member's employment under the 

authority of section I 04.14(b). Advisory Opinion 2001-10 (Jackson). In another advisory 

opinion that construed the personal use provisions, here in the context of the use of a car for 

campaign and for personal purposes, the Commission observed that the preservation of a mileage 

log that would be updated with each use of the car would satisfy the recordkeeping requirements 

of I I C.F.R. § 104. 14(b) if maintained as part of the committee's accounting records. Advisory 

Opinion 2001-03 (Meeks). The Commission has also indicated that payroll deduction 

authorization forms are among the records that would satisfy the recordkeeping requirement of 

section 104.14(b)(I). See, e.g., Advisory Opinion 1999-03 (Microsoft PAC); MUR 4955 

(Metropolitan Life Insurance Company Employees' Political Participation Fund A), Factual and 

Legal Analysis (Dec. 22, 1999). 1 Finally, in a matter involving enforcement of the requirement 

In a subsequent unanimous Statement of Reasons, the Commission concluded that it would no longer 

consider copies of the original signed payroll deduction authorization form to be the sole adequate means of 

satisfying section I 04. 14(b)(l ). See Statement of Reasons of Chairman Michael E. Toner, Vice Chairman Robert D. 

Lenhard, and Commissioners DrIVid M. Mason. Steven T. Walther. Ellen L. Weintraub, and Hans A. Von Spakovsky 

In the Matier of Lockheed Martin Employees' PAC, MUR 5721, Audit Referral 05-10, RAD Referral 06L-01 (Jun. 

13, 2006). This revision of the policy does not, however, indicate that the payroll deduction authoriz.ation form is 

not appropriately included among the documents required to be maintained under section 104.14(b)(l). See 

Statement of Policy[,] Recordkeeping Requirements for Payroll Deduction Authorizations, 71 Fed. Reg. 38513 (Jul. 

7, 2006) (signed payroll deduction authorization fonns not the only adequate proof for meeting§ 104.14(b)(l), but 
Comments on the Draft Pinal Audit Report 

Conservative Campaign Committee (LRA 996) 

Page 3 

to file 24-Hour reports of independent expenditures, the Commission admonished the respondent 

committee for failing to maintain various types of documents memorializing the dissemination 

dates of the advertisements under section 104.14(b)(l). See MUR 5850 (Republican National 

Committee), Factual and Legal Analysis, at 6 (Dec. 17, 2007). 

Although employment contracts, mileage logs, payroll deduction authorization forms, 

and the various documents memorializing independent expenditure dissemination dates are not 

specifically listed in section 104.14(b)(l), the Commission required the requesting committees to 

maintain these kinds of records under the authority of that provision because they were essential 

for enabling the Commission to verify the legal correctness of the committees' reports of their 

permissible campaign receipts and expenses in the context of an audit or other inspection. The 

same logic supports requiring committees engaged in making independent expenditures to 

maintain the communications associated with the disbursements to enable the Commission to 

verify, and to differentiate between, the committee's independent expenditures and its operating 

expenditures. 

If the Commission interpreted the regulation narrowly to exclude all types of potentially 

verifying documents not enumerated in section 104.14(b )(1 ), then the capacity of the 

Commission to verify the accuracy and completeness ofa committee's reporting would be 

severely restricted because not all information contained in reports may be verified by recourse 

to the types of records enumerated in section 104. J 4(b)(l ). For example, the Federal Election 

Campaign Act of 1971, as amended, and Commission regulations require committees to report 

the purposes of their disbursements. See 52 U.S.C. § 30!04(b)(4), (5). 11 C.F.R. §§ !04.3(b)(3); 

104.9. The Commission has provided examples of acceptable purpose descriptions as "dinner 

expenses, media, salary, [and] polling." See, e.g., 11 C.F.R. § 104.3(b)(3)(i)(B). The kinds of 

bank records enumerated in section 104.14, however, would not necessarily include the type of 

information that is required to verify that the Committee used the disbursements for "dinner 

expenses, media, salary, [ and] polling." Id. 

In this case, while the Committee reported the media expenses as operating expenditures, 

the Audit staff needs to ascertain the nature of the disbursements to determine whether any of 

these should have been reported as independent expenditures. The text of the communications 

associated with the disbursements may be the only evidence of the nature of the disbursements.2 

The Commission's regulations require the Committee to maintain and provide "the necessary 

information ... from which [its] filed reports and statements may be verified, explained, 

maintaining them is a sound recordkeeping practice and in many cases they may serve as best documentation of 

deduction authorization). 

lndeed, in previous conunents we provided to the Audit Division on several interim audit reports ("IARs"), 

we stated that using invoices alone to infer that disbursements on media expenses were made for independent 

expenditures would be legally inappropriate in the absence of the text of the associated communication. See 

Comments ofOGC on JAR on the Colorado Republican Comminee (LRA 961), received by Audit Division on Dec. 

11, 2015; Comments ofOGC on JAR on the Conservative Campaign Committee (LRA 996), dated Nov. 25, 2015; 

Comments ofOGC on !AR on TeaPartyExpress.Org (LRA 995), dated Dec. I, 2015; and Comments ofOGC on 

!AR on the 11linois Republican Party (LRA 1006), dated Dec. 22, 2015. 
Comments on the Draft Final Audit Report 

Conservative Campaign Committee (LRA 996) 

Page4 

clarified, and checked for accuracy and completeness." Thus, it is essential that the Audit staff 

have access to this information and that committees maintain it.