Campaign Finance Law and the Internet:
Problems Raised for Individuals’ Online Political Speech

John B. Morris, Jr., Center for Democracy & Technology

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. The public may comments on the proposed rules until June 3, 2005. The FEC has released a helpful detailed summary of the NPRM, and CDT & IPDI have released a very brief overview of the NPRM.

The main affirmative step the NPRM proposes is to define the statutory term “public communication” to include paid advertisements placed on third party’s Internet sites, thereby bringing such advertisements within the reach of the FEC’s campaign finance regulations. It is apparent that the FEC sought to confine its regulatory coverage of Internet communications to only a narrow category of speech, and to leave largely unregulated the great bulk of online political speech of ordinary people on the Internet.

But notwithstanding the narrow aim of the FEC’s NPRM, both the proposed new rules and existing (and unchanged) regulations fit very poorly in the Internet context. Speech on the Internet is so fundamentally different than speech on other mass media that the laws and rules crafted for “old” media have significant unintended consequences when imposed on new media. And nowhere are the harmful effects more clear than with the speech of ordinary people, individuals who through the Internet can reach out and speak directly to their fellow voters – for the first time in our history since the town common ceased being a common meeting ground. Simply put, the campaign finance laws – even with the careful efforts of the FEC – impose significant burdens on individual speech, and ultimately will have the effect of chilling that speech.

This discussion of problems raised by the NPRM and campaign finance laws more generally focuses only on the impact on individual speakers – the ordinary voters expressing their political views on the new medium of the Internet. This discussion assumes that campaign finance laws do and should apply to some Internet speech (online speech, for example, of campaigns and party organizations), and it leaves for another debate questions about whether the online speech of large corporations and unions should be regulated exactly the same as their offline speech. Instead, the concerns discussed below focus only on burdens on online speech of ordinary men and women.

The discussion below looks at two types of problems. First, generally speaking, the fact that the campaign finance laws are ill-suited for the Internet creates fundamental burdens when those laws are applied to online speech of individuals. Second, a variety of particular aspects of political speech on the Internet raise specific, detailed problems for individuals’ speech online.

I. FECA and the Internet: 500 Pages of Detailed Rules about Apples – But Applied to Oranges

The foundation of modern campaign finance regulation – the Federal Election Campaign Act (“FECA”) – was enacted by Congress in 1971. Among other things, FECA imposed limits on how much a candidate could spend on television advertising (a limit that was subsequently overturned by the Supreme Court), and bolstered rules about the disclosure of contributions and expenditures. In subsequent legislation in 1974 and 1976 Congress restructured FECA and created a far more comprehensive regime of disclosure requirements, contribution limits, and spending limits. And, critically, the 1974 FECA Amendments created the Federal Election Commission. Thus, by the mid-1970s, Congress had launched the key elements of today’s campaign finance regulatory system.

Another historic development occurred in 1974. In May of that year, Vinton Cerf and Robert Kahn published “A Protocol for Packet Network Intercommunication,” which was the first description of what became the Transmission Control Protocol – the “TCP” of the TCP/IP suite of protocols that form the foundation of what we now call the Internet. The first commercial dial-up Internet access was not available until 1990, and the World Wide Web was not invented until 1991. The Internet did not see broad adoption until the late 1990s.

Not only did the Internet as we know it emerge long after the campaign finance system was created, but the technical and demographic characteristics of the Internet are radically different than any preceding electronic media of mass communications. As of the 1970s and the advent of modern campaign finance rules, the means of mass communications were well established as narrow channels of speech available to a very limited number of speakers. And critically, to reach a big audience, a speaker needed big money, often tens of thousands of dollars for a single advertisement. Moreover, for radio, television, and even newspapers, the listening audience had little or no control over what they heard – although they could change channels, they could do little to avoid commercials – including campaign advertisements.

The Internet stands in stark contrast to the mass media of the 1970s. The Internet is open to literally tens of millions of speakers across the United States, and hundreds of millions of speakers around the world. To reach a vast national or global audience, one needs to spend little or no money. One can speak to millions without placing any advertisements, but even ads on the Internet can sometimes be priced at pennies per individual ad. And not only does the Internet offer the potential to speak, but millions are in fact speaking out on the Internet – recent reports about the new phenomenon of blogging indicate that between 2 and 8 million Americans publish their own blog. And tens of millions of American voters are listening to political speech over the Internet – Pew reports that 75 million Americans used the Internet to receive election information or discuss politics. Moreover, those receiving political information over the Internet can finely choose what blog to read or web sites to visit.

Even more important than the aggregate differences between the Internet and older forms of mass communications is the dramatic difference in the characteristics of the “average” political speaker in the different media. In the 2004 election cycle, thousands (but probably not tens of thousands) of people purchased political advertisement time on radio and television networks around the country in conjunction with a federal election race, but it is likely that the vast majority of those individuals were working for or with an organized political campaign or party. And critically, it is likely that the vast majority of those organized campaigns or parties had retained – or had the resources to retain – one or more attorneys to advise them about compliance with the campaign finance laws.

In the 2004 election cycle, in contrast, millions (and possibly tens of millions) of individual Americans expressed their political views online, and at most a tiny fraction of those individuals were working for an organized political campaign or party. And it is certain that the vast majority of those millions of speakers had not retained attorneys to advise them on campaign finance law issues.

But without attorneys (indeed, without attorneys steeped in campaign finance law) the task of determining what one’s obligations are under the laws and regulations is daunting, to say the least. An uninitiated speaker wanting to comply with federal law is confronted with:

• 234 pages of statutes from the U.S. Code;
• 516 pages of FEC regulations from the Code of Federal Regulations;
• 702 pages of “explanations and justifications” of the FEC regulations;
• more than 1300 FEC Advisory Opinions supplementing the regulations;
• more than 350 federal court decisions concerning the FEC’s regulations;

Even if an online speaker knew precisely which regulations to review (and assuming for the sake of argument that the rules proposed in the current NPRM are adopted without change), someone planning to actively use the Internet to express his or her political views would have to consult, at a bare minimum, the following provisions from Chapter 11 of the Code of Federal Regulations (“CFR”):

• 11 CFR § 100.26 to determine if their speech would be treated as a “public communication”;
• 11 CFR § 100.22 to determine if their speech qualifies as “express advocacy”;
• 11 CFR §§ 100.73 and 100.132 to determine if they qualify under the news media exemption;
• 11 CFR § 100.94 to determine if their Internet activities count as contributions subject to limits;
• 11 CFR § 100.155 to determine if their Internet activities count as expenditures for reporting purposes;
• 11 CFR § 114.9 to determine if their use of an employer’s computer to access the Internet is permissible;
• 11 CFR §§ 100.27 and 110.11 to determine if their bulk e-mail requires a specific type of disclaimer; and
• 11 CFR § 100.5 to determine whether their plan to collaborate with their neighbor to speak on the Internet means that they qualify as a “political committee” subject to registration and reporting requirements.

In the face of such an array of laws and regulations, it is certain that at least some individual speakers on the Internet will choose to forgo online political speech. That many Internet speakers may in fact be oblivious to the existence of the laws and regulations (and thus may never think to consult them) does not avoid the fact that some speakers will attempt to determine their correct classification under the regulations, and decide to forgo their speech instead. The highly complex and voluminous rules will have an unavoidable “chilling effect” on constitutionally protected – indeed, constitutionally valued – political speech.

The fact that the FEC has laudably sought to narrow the reach of its regulation of Internet speech also does not alter the chilling effect of the rules. Unless either Congress or the FEC breaks the mold of pre-existing campaign finance regulations and drafts a single, short and easy-to-understand exemption of individuals’ online speech, the complexity of the rules as a whole will chill individuals’ speech – speech that the campaign finance laws and rules should be promoting. Congress or the FEC must draft a rule accessible to and understandable by the average Internet speaker.

II. Applying Campaign Finance Law to Individuals’ Online Political Speech: A Series of Glitches and Anomalies

Because the campaign finance laws were designed in a different era for a different type of mass communications medium, the laws map very poorly onto the Internet, and the effort leads to a broad range of problems in applying the laws. And, because of the enormous diversity of types of Internet speech, and the rapid creation and evolution of wholly new forms of online communications (such as the blog), the glitches and snags in applying campaign finance laws to the Internet are very likely to continue.

The following are some of the particular problems and concerns raised by the application of the campaign finance laws to the individuals’ online communications. The scenarios – some hypothetical and some actual – all suggest that valuable speech may be chilled and diminished. None of the problems, taken alone, will likely stop enormous quantities of online speech, but taken together the burdens on speech will cause significant harm. Some of the problems below could be solved by tweaking a regulation or creating an additional narrow exception to a rule, but such tweaking and exceptions will exacerbate the overarching problem of complexity of the rules and are unlikely to anticipate innovations in technology.

The follow scenarios, for example, demonstrate some of the concerns that arise:

A. Twenty-Five Dollar Advertisements Expressly Advocating for a Candidate. The centerpiece of the FEC’s Notice of Proposed Rulemaking is the narrow extension of the definition of “public communication” to include paid Internet advertisements. Superficially this seems reasonable, based on the assumption from the offline world that advertisements probably cost significant money. But in the Internet context, banner advertisements often cost in the neighborhood of $25 per 1000 displays of an ad (or less than 3 cents per ad display). While most web sites require that ad purchases be for substantially more than 1000 displays, it is likely that activists in future campaigns will purchase $5000 worth of ad displays and then resell the displays in $25 increments to individuals who want to display an “online bumper sticker” in support of a candidate (declaring, for example, that “Bob Smith of Rockville Supports Jones for President”), with the banner ad placed on community-focused web sites. Imposing burdensome campaign finance obligations on all Internet political ads no matter how trivial the cost would certainly discourage this and other types of innovative individual political speech. Simply stated, this type of paid speech by individuals is not the type of speech at which the campaign finance laws are aimed.

B. Voters Posting “Online Bumper Stickers” Required to Also Post a Home Address. In the “Bob Smith of Rockville Supports Jones for President” example above, Mr. Smith would be required to display on the banner ad a home street address – a privacy invasion that may well discourage the speech entirely. Moreover, it is unlikely that a disclaimer could even fit within the confines of a banner advertisement (and some individual speakers may not operate a web site that could contain the information).

C. Production of an Online Video. If an individual, without coordination with any campaign, decides to create and post a short video attacking an incumbent President running for re-election, and he or she spends $251 on the production of the video (aside from the Internet hosting costs), the individual would have to commence filing reports with the FEC (thereby likely discouraging the creation of the individual advocacy in the first place).

D. Events Outside of the Control of the Individual Speaker Could Push Expenses over the $250 Threshold for Reporting Expenditures. Although the FEC has excluded many Internet costs from the calculation of expenditures by individuals, there are many Internet-related costs that are not mentioned and remain in a gray area, and some of those costs are unpredictable. If an individual makes a short video as described above, it is unclear whether cost charged by an Internet content streaming company would be exempt or not. If the individual makes the video for $100 and plans to spend $100 to stream the video (thereby avoiding the $250 reporting requirement), the $100 streaming costs could unexpectedly jump over $150 because someone publicizes the link to the video without the individual’s knowledge. The individual could find him or herself in violation of the law a filing deadline had passed.

E. Two (or a Few) Individuals Collaborating on Internet Speech May Unwillingly or Unknowingly Become a “Political Committee.” If four friends get together to create and post on the Internet a video attacking an incumbent running for re-election and the video costs $1001, the friends may be considered a “political committee” subject to a host of burdensome rules. Such a result would very likely discourage the speech in the first place.

F. An Active Political Blogger Who Incorporates For Liability Purposes Would Thereafter be Excluded from Continuing to Express Support for a Candidate. An active blogger may well want to incorporate for liability purposes, but if the blogger fails to “give reasonably equal coverage to all opposing candidates” the blog might not qualify for the news media exemption. Thus, that individual (incorporated as a single employee company) would be prohibited from a wide range of political speech.

G. An Active Blogger Whose Blog is Affirmatively Supported by His or Her Employer. The Internet creates a much broader set of situations in which an employer might want an employee to blog, even though the employee is solely expressing the employee’s opinions. For example, Lawrence Lessig is a noted law professor at a private (and incorporated) university, and he runs a very popular blog. Lessig’s active online dialogue on a wide range of issues – including “presidential politics” – is certainly an informal part of Lessig’s academic work, and thus it is unclear whether his blogging would be considered “incidental” to the corporation. The prohibition on “corporate” blogging could well chill academic discourse at private universities.

These are examples of problems that arise with the application of the campaign finance laws to individuals’ speech on the Internet. Some, but not all, of these problems might be addressed by a single, short and easy-to-understand exemption of individuals’ online speech, as proposed above. Alternatively, some could be addressed by more regulatory exceptions and fine tuning of the rules – an approach that will exacerbate the already high level of complexity.

Beyond the broad concern that the rules are simply too complex for practical application to ordinary speakers (and the complexity will chill them from speaking), and the specific problems raised above – there is also the very real possibility that the FEC complaint and enforcement process will itself become a tool for political mischief. Simply by filing a complaint with the FEC, a political opponent can haul an individual speaker into a civil proceeding in Washington, D.C., one in which the speaker would be well advised to take seriously and hire an attorney. In a world where only a few thousand “speakers” actually used the mass media, and most had access to attorneys, the complaint process may not have been an effective means of harassing an opponent. But where the rules apply to millions of speakers who are engaged in the robust debate that the Internet allows – and there are numerous complex rules to determine whether some Internet speech is covered or not – it is highly likely that the complaint process will be abused.

Finally, and critically, it is unclear whether the Federal Election Commission has the authority to solve all of the broad and specific problems and concerns. Thus, it is likely that no matter what, Congress will need to step in to protect and promote individuals’ political speech online.

The author appreciates the comments and input of Carol Darr and Leslie Harris on earlier drafts of this document.