Overview of the FEC's Notice of Public Rule Making Concerning Online Political Speech

On March 28, 2005, the Federal Election Commission (“FEC”) issued a Notice of Proposed Rulemaking (“NPRM”) proposing to extend campaign finance regulations to certain political speech on the Internet. Under the FEC’s procedures, the public may comments on the proposed rules until June 3, 2005.

The FEC has released a detailed and helpful summary of the NPRM, and this document only provides a far briefer overview of the NPRM. An analysis of the problems raised by the NPRM and the campaign finance rules more generally is set out in a separate document.

Background on Campaign Finance Rules and the Internet

The Federal Election Campaign Act of 1971 – the foundation of modern campaign finance law – was aimed at decreasing the influence of money on elections. Advocates of campaign finance reform were concerned with the corrupting influence of money, the domination of expensive TV advertisements, and the resulting drop in the quality of electoral debate. Among other things, the campaign finance law limits individual contributions, prohibits corporate contributions, and requires disclosure of big contributions and the sponsorship of advertisements. In 1971 the Internet was only just being created, and the campaign finance laws were designed for the traditional broadcast and print media, which are generally centralized, scarce, and expensive. Not surprisingly, the original laws did not consider their possible application to the decentralized, abundant, and inexpensive nature of the Internet.

Since the mid-1990s, the question has arisen periodically whether the Internet should be subject to federal campaign finance law. After initially taking a very regulatory approach to the Internet, the Federal Election Commission studied the technology more closely, and in 2000-02, the FEC gave greater leeway to individuals to use the Internet for political speech.

In 2002, Congress adopted the Bipartisan Campaign Reform Act (“BCRA”) in large part to stem the flow of unlimited “soft money” contributions to political parties. Sometimes called McCain-Feingold after its key Senate sponsors, the law was not meant to change the treatment of the Internet under the campaign finance laws. Political speech on the Internet was not – in 2002 – a significant issue, and Congress did not directly any part of BCRA squarely at the Internet. BCRA and its possible impact on Internet speech is discussed in Trevor Potter & Glen Shor, “The FEC’s Campaign Finance Reform Regulations and the Internet.”

The FEC initially ruled that Internet activity was almost entirely exempt from BCRA. In September 2004, however, the U.S. District Court for the District of Columbia ruled in Shays v. FEC (brought by two of BCRA’s Congressional sponsors) that the FEC could not completely exempt Internet activity from regulation. The federal court left it to the FEC to determine, in the first instance, what types of Internet activities should be regulated under BCRA and the campaign finance laws more generally.

The FEC’s Notice of Proposed Rulemaking

On March 28, 2005, in response to the federal court’s ruling in Shays v. FEC, the Federal Election Commission approved the release of a Notice of Proposed Rulemaking ("NPRM"), proposing, among other things, to interpret a key term in BCRA – "public communication" – to cover certain Internet content. The FEC has released helpful a summary of the NPRM.

The primary actions proposed in the NPRM are:

• To extend the definition of “public communications” to include paid advertisements placed on third parties’ Internet web sites. Under the rules overturned by federal court, the term “public communication” had generally not included Internet communications. The term “public communication” is used in a number of important places throughout the FEC’s campaign finance regulations, and thus the inclusion of paid Internet ads has a repercussions in a number of areas.


• To expand the reach of the campaign finance “disclaimer” requirement to include paid Internet advertisements. Under the new disclaimer rules, people placing paid advertisements on the Internet would be required to disclose their name and address.


• To narrow the disclaimer requirement for bulk e-mails. Previously, any bulk sending of over 500 e-mails required a disclaimer. Under the proposed rules, only e-mails sent using purchased mailing lists require a disclaimer.


• To expand somewhat the news media “exemption” from the campaign finance rules to make clear that Internet news sites are exempt from the rules even if the sites do not have an off-line counterpart. In the new proposals, the FEC is generally trying to exempt bloggers from regulation.


• To exclude from the definition of “contribution” and “expenditure” certain Internet expenses, so as to exclude some Internet activities from disclosure and reporting requirements under the campaign finance laws. By excluding Internet access costs and other expenses, individuals and volunteers can work to support a candidate without having to track and report their expenses.

These changes to the campaign finance laws are intended by the FEC to be cautious and narrow. The FEC Commissioners have made clear that they were not seeking to apply the campaign finance laws to all or even most individuals’ Internet political speech. Because of the realities of Internet communications and the complexity of the campaign finance laws, however, the NPRM and the pre-existing campaign finance laws create a number of burdens on individuals’ online political speech. Among the problems confronting small and individual Internet speakers are:

• disclaimer requirements and other campaign finance regulations would apply to individuals who pay only a few dollars for a paid Internet advertisements;


• if two or more independent online speakers collaborate on a web site, they may have to register with the FEC as a “political committee;”


• expenditures on small and independent Internet speech may trigger a requirement to file reports with the FEC; and


• most importantly, many small and individual speakers will need to obtain legal advice to determine whether and what campaign finance rules apply to them.

All of these concerns will act to discourage small speakers from expressing their political views – a result that is directly contrary to the goals of the campaign finance laws. These and other concerns are discussed more fully in a separate document.

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