This file contains archived live captions of the open meeting of the Federal Election Commission held on January 28, 2021. This file is not a transcript of the meeting, and it has not been reviewed for accuracy or approved by the Federal Election Commission. This file is not a transcript of the meeting, and it has not been reviewed for accuracy or approved by the Federal Election Commission. Thank you. Good morning. The open meeting of the Federal election commission for Thursday, January 28, 2021 will come to order. The first item on the agenda is advisory opinion 2020 06 resolved on tally. The next item on the agenda is audit division recommendation memorandum I Mississippi Republican Party 1715. We have and Dana Brown of the audit division here to discuss the matter. If you're ready, make your presentation. Thank you. Thank you Madame Chair. A morning Madame Chair commissioners. Before you is the memorandum of the Mississippi Republican Party submitted to the commission for consideration on June 4, 2020. The a DRM provides recognition for each finding outlined in the draft final order report. Their three findings. Finding one, misstatement of financial activity. Finding 2, reporting of debts and obligations. Finding 3, reporting independent expenditures. We will be happy to and there are any questions regarding the recommendation memo or the outline findings. Thank you. Is there any discussion on this matter? No discussion. Are there any motions on this matter? Madame Chair. I'm sorry. I do have one question about the memo before we get to motions. Could you walk me through the reasoning behind findings 3 with regard to the independent expenditures ? I am not sure I completely understand the direction we're headed here with the mailer. If you could walk me through that, I would appreciate that. Are you looking at the LRA 1077 beginning on page 4? It explains the notes considered by OGC for each mailer and the classification for it. On 122 , the legal guidance for each of the eight mailers with number 8 removed, but number 9 brought back in. -- Or brought in actually. >> Webpage? -- What page? 4 of 7 of LRA 1077. Those are attached as exhibits somewhere? They should be. A folder. Let me go back . Madame Chair , I believe I could supplement the response to the question if I may. Mr. Morcomb referred to our legal analysis of the draft final audit report which contains a chart outlining a classification . Each of the nine mailers. As we consider those classifications at the time, I should mention we subsequently revised classification of mailer 8 in comments to the audit division recommendation memorandum, and we recommended that mailer 8 be removed from finding 3. But our assessment of the remaining eight mailers is still the same . That is, we consider them all to be express advocacy. Now in terms of the larger issues that were also discussed in the independent expenditure finding -- Before you go to that, tell me why 8 got taken out real quick. We considered mailer 8 to resemble mailers that we had recommended in the past not be considered independent expenditures because they were essentially preference polling rather than expectations to vote for the identified candidates. Related to a prior comments memorandum that we issued in connection with the previous audit . So that was the reason for our reversal on that particular mailer. Okay. Are we going to speak to the broader issue? Yes, there were other issues the committee raised in connection with propriety of issuing this finding. One being the question of whether these mailers should be considered independent expenditures at all because their purpose was to solicit contributions. We outlined in our memorandum why we disagreed with the committee position about that. The commission has issued four audits previously for final audit reports in which it is accepted. The conclusion that certain communications canvassed in those audit reports will qualify as independent expenditures despite the fact the committee in those four previous audits also raise to that contention. We were following precedent essentially with respect to that conclusion. The committee also raised a question about whether even if the mailer should be considered independent expenditures despite their fundraising content, they could be considered allocable according to their internally allocable according to the different purposes or the different types of content contained in the communication. And we considered that matter, and we eventually concluded that they should not be considered internally allocable. Why is that? >> Thing is that that follows from statement -- the commission, I beg your pardon, the commission made in its 1995 explanation and justification for the express advocacy regulation . The commission had discussed one hypothetical communication that contained both express advocacy and issue advocacy . Issued a statement that despite the fact that the mailing contained both express advocacy and issue advocacy, it would still be considered express advocacy under the commission express advocacy rule, and that logic, or the principal seemed to us to be equally applicable to communications containing express advocacy and other kinds of content. So that For purposes of this audit, that is a matter of first impression for us with regard to it being a solicitation and what you classified as an independent expenditure. >> When you refer to the issue being one of first impression, are you referring -- may I ask if you're referring to the question about whether solicitation messages can be considered express advocacy and independent expenditures at all? Or are you referring to the issue of whether they can be allocated by their internal content? Well, the precedent you cited was issue advocacy and independent expenditures together . The question I have is , is the case of solicitation and independent expenditures, is is the first time we have considered that? I would say this is an issue of first impression regarding the question of allocation, which is a closer issue. But based on the four previous audits we referred to in our comments memorandum, the question of whether a communication that, whose purpose is to solicit contributions can be considered an independent expenditure at all or whether a fundraising message should not be considered an independent expenditure by reason of its purpose to fund raise. We don't consider that to be an issue of first impression. I mean, I don't consider a solicitation to be an independent expenditure in any regards, but -- what test with the regulated community look to in putting together a solicitation email or solicitation letter ? What test with a look to to determine whether or not it falls squarely within a solicitation, and therefore, not an independent expenditure, or it would be an independent expenditure? Well, our view actually is that the test would be whether the solicitation message contains words of express advocacy as a commission regular see on express advocacy to find that term. Regardless -- I'm sorry. Go ahead. Our view would be that if a solicitation message contains words of express advocacy as the commission regulation defines that term then the committee, that would be the test for the committee to consider whether it is an independent expenditure. Okay. Just hypothetically here, you get one of these nine pay solicitation letters from the Mississippi Republican Party , and one Senate has expressed advocacy in it , the rest of the nine pages is nothing more than reasons to donate money to the Mississippi Republican Party, the entire thing is express advocacy, therefore, expenditure. Yes, based on the reasoning we outlined in our comments. Okay. I am just not convinced that is the case. Given the nature of how state parties fund raise and the extent to which they go to to solicit these funds, I cannot agree with that particular position. But I appreciate you informing me on it. >> Thank you. Any further questions or discussion on this matter? Commissioner Weintraub. Thank you Madame Chair. I gather that my colleague wants to delete findings. I, on the other hand, want to add findings. I think the findings are all fine except they are not -- there just aren't enough of them. Add some more. >> -- I don't know what they are. Maybe you will surprise me. First of all, on the subject of whether solicitation would take a communication that otherwise includes express advocacy would normally be considered independent expenditure out of the realm of an independent expenditure, I respectfully have to disagree with my colleague . Political committees in general are in the business of raising and spending money for the purpose of influencing elections. When they raise money, they almost always say why they want to do that. It is because they're trying to influence elections. In the course of saying they are trying to influence elections. That is, almost all the time express advocacy. It would be very easy -- and indeed political committees almost always include and asked for money because, why wouldn't they? So if we were to take out of the realm of independent expenditures, everything that asks for money, we would be taking a lot of material out of that category. That would have certain consequences for state party committees, but it would have even broader consequences for other political committees and other groups that engage in solicitations and express advocacy. Because state party committees, by definition, they are already political committees. They're going to be filing reports , but when we are talking about groups that are not state party committees, if they were to, if they were able to take all of their solicitations out of the category of express advocacy independent expenditures, if they were able to make all their independent expenditures basically not be counted as independent expenditures by virtue, just adding a solicitation onto it, it would become very easy for these outside groups to say we're not political committees, we don't have to file any kind of disclosure whatsoever. I think that would really undermine -- and just creates too easy a path for evasion and circumvention of the important disclosure mission at the heart of this agencies operations. I have to respectfully disagree with my colleague that having a solicitation included in a communication that also includes express advocacy somehow negates the aspects advocacy. That is in there. so as I said, have to respectfully disagree with my colleague on that. I also think that ODC and the audit division got it right the first time on mailer 8. I believe it should be included as an independent expenditure . In addition, this I believe is the last of the party committees that we have audited that were part of these massive joint fundraising committees that both President Trump and Secretary Clinton set up in the 2016 election. And in the joint fundraising regulations, they say right in them they are not supposed to be a pathway for circumventing the contribution limits . They are a method for a bunch of different committees to get together and raise funds together. But what happened, in fact, in the election of both sides was that these massive joint fundraising committees were set up, and money was raised, people would max out to the national party commission and also Max out to the state party committees that were part of the joint fundraising committees, and the state party committees, as soon as they got the money, they pass it back to the national party committees. A massive circumvention of the contribution limits. And if you want to read a really scintillating statement on this topic, you can go look at the statement I issued in mid-2019 on both the Trump and Hillary joint victory committees. As I have with every other of these state party committees who has come through this process and was part of that, I am going to make a motion to add a new finding on the joint fundraising regulations on what I believe to be a violation of the joint fundraising regulations. Finally, I am going to make a motion at the appropriate time to add a new finding with respect to the failure to maintain payroll logs, these payroll logs were required so that it could be seen whether the party committees were complying with their requirements to have a certain amount of federal funds used to pay staff who were working on at least, who spent at least 25% of their time of federal activities, and I do not believe that Congress intended for that law to be circumvented by the expedience of just declaring all of one's employees to be independent contractors, and therefore, no laws be required. At the appropriate time, I am happy to make a motion to approve the audit division recommendations with several enhancements. >> Thank you Commissioner Weintraub. Any other commission or discussion? >> Go ahead Steve. I'm just going to add I support the enhancements of the proposed . As always on this issue. Thank you. Mr. Trainor, I believe he also wanted to speak . I the question with OGC with regard to the issue of these joint fundraising committees and whether or not the Mississippi Republican Party has already been a respondent in 7339 where the issue was expressly addressed by the commission and whether or not reasserting the same thing here that is already been denied by the commission previously would create some sort of procedural due process concerns. Yes Madame Chair. Commissioner Trainor I am not certain I recall at the moment. I believe , I am not certain I recall whether this party was respondent in that. Perhaps somebody could -- Your -- I am a pretty good lawyer. I don't ask a question if I don't know the answer to it. the answer is yes. The answer is yes they were respondent. Okay. I'm sorry. Yes. Okay. Since the commission already took action in that and did not go with Commissioner Weintraub some particular interpretation there, be considering it here in dealing with Mississippi GOP as a standalone, have we not created some sort of procedural due process concern or -- it is not a criminal context, not a double jeopardy type situation, but clearly they haven't had a chance to respond to other than in the previous MER, they have not had a chance to respond to anything new we would adhere. >> I am not certain I am able to respond to that question at present. That would be something I would need to consider. Let me ask this. Do we think it would be appropriate, if we're going to add something new to this particular report, do we think it would be appropriate to allow the Mississippi Republican Party to respond to whatever is added additionally after this hearing? >> Madame Chair? Yes Mr. Holloway. >> I don't think this allows the opportunity to respond. Even though it is possible to add findings, I don't think the director contemplates the committee will get another opportunity to respond. >> Theoretically we can come up with any violations we think, we can add them to this particular matter and they get no opportunity to respond? I can say this. No committee has actually raised that. I can't say we have done that A lot of times, but the possibility does exist . I'm not saying there's not a due process argument with respect to that. If the committees were to raise that, I'm just saying I am laying out for what is actually possible right now. Okay. Commissioner Weintraub, I am not understanding what your second additional finding would be. >> If I may Madame Chair. Of course. >> First of all, with respect to your procedural due process argument, which I am not, I don't think I actually applies to these proceedings , I did make a similar motion at the preceding stage of the audit process for the specific purpose of allowing the committee to have a chance to respond to it and my colleagues, is split 3-3, I expect this will also split. So the committee was denied the opportunity to respond to the argument because my colleagues refused to allow that to happen. I am happy to allow them a chance to respond. We are where we are in the process. I tried to do that and an earlier point. Your other question is about the payroll? Is that what your second motion was? The second part of your motion? Well, it is a four-part motion, one is to approve the ADRM as it stands, plus to add mailer 8 to finding 3 . Three is to add a new finding on the joint fundraising issue and four is the payroll issue . It is it the payroll issue? The payroll issue is and when I asked about. I will go back. Sorry? It is my understanding that the issue of the contract workers was raised earlier in the audit as far as the record-keeping requirement was concerned and that the auditors didn't challenge the committee assertion that the contractors were not employees. Did I misread that? You don't have to answer that Commissioner Weintraub. They can answer that. We fall the ODC recommendation , 1077, for the report. They recommended it would be revised to accept the committee representation that the personnel are contract workers. Okay. I don't have any questions Madame Chair. Thank you Commissioner Trainor. Any questions, any further questions for the office of General Counsel or audit or is there a motion? Commissioner Weintraub has hinted on this motion. Let's get right into it. Thank you. Thank you Madame Chair. Audit division recommendation memorandum on the Mississippi Republican Party 17 -15, I moved to approve the audit commission recommendations and mailer 8 to finding 3 reporting of the apparent independent expenditures and adjust the amount of violation accordingly which would make it I believe $42,967 . Add a new finding that the Mississippi Republican Party violated the fundraising regulations of section 102.17 C when it received $1,587,962 in net proceeds for the Trump victory joint fundraising committee, and on the same day, transferred $1,587,842 to the Republican national committee and finally adding new finding that the Mississippi Republican Party failed to maintain any monthly payroll logs to document the percentage of time each employee spent in connection with the federal election totaling $42,415. Thank you. Is there any discussion on this motion? Madame Chair. I just wanted, because I didn't get a chance to say this earlier, I wanted to thank OGC and the audits for their presentation. I thought it was very helpful. I thought he might not get a chance to say that later. So I wanted to say it. Great.. I think we have a consensus on that part right there. Any discussion on the motion from Commissioner Weintraub? I am seeing none. I will call the question. All those in favor please say [ Laughter ] one. [ Laughter ] one. All those opposed? No. The motion fails with 3 votes in favor with Commissioner Weintraub, Commissioner Walther myself and three votes opposing the Vice Chair, Commissioner Trainor and Commissioner Cooksey. Are there any further motions? Madame Chair, I have a motion. Yes. Commissioner Trainor. In the same matter, Mississippi Republican Party, 17-15 , I would moved to accept the audit division recommendation with the removal of anything related to finding 3 reporting of apparent independent expenditures. >> Thank you. Is there any discussion. Commissioner Weintraub. Thank you Madame Chair. Commissioner, I wondered if he would be willing to slightly reframe that? I don't want to vote affirmatively for removing finding 3, but if you can make that into a motion to approve findings one and two, that would be something I could support. Okay. I will accept that as a friendly amendment to my motion Madame Chair. My motion now is to accept findings one and two. Thank you. Any discussion on this motion? I am seeing none. All those in favor please say [ Laughter ] one. [ Laughter ] one. -- [ Laughter ] one. The motion passes 6-0. I think that is the only item on the agenda. So we have the final question Mr. staff director. Any management or administrative matters before the commission that we need to discuss today? There are no such matters. Thank you. The meeting stands adjourned. [ Event concluded ]