AO 2010-30: Rental of email list to committees at fair market value is not coordinated expenditure or coordinated communication

Citizens United’s rental of its email list to federal candidates and political committees at fair market value will not result in a prohibited coordinated expenditure or “coordinated communication.”

The Commission considered, but could not decide by the required four affirmative votes, whether or not Citizens United’s proposed activities violate the prohibition against corporate facilitation of contributions to candidates or political committees. See 11 CFR 114.2(f).

Background

Citizens United is a 501(c)(4) incorporated nonprofit membership organization which has developed a list of email subscribers over a period of several years. The email list includes members of Citizens United and non-members, such as individuals who have purchased DVDs from the organization. Citizens United regularly rents its email list to other entities at fair market value through a commercial list brokerage firm.

Citizens United wants to rent its email list to federal candidates, authorized committees of federal candidates, political party committees and other political committees using the same procedures it currently uses to rent its list to others. Under the brokerage firm’s standard practices, all communications on behalf of the renter of the list would appear to be from Citizens United, as Citizens United would be listed in the “from” line of the communication. However, the subject heading would indicate that the message and its content is from the email list renter. The political committee or federal candidate renting the list would pay the brokerage firm, which would deduct its fee then forward the remainder to Citizens United. While committees must promise to pay before any email messages are sent, the actual payments may occur afterward.

Analysis

The Federal Election Campaign Act (the Act) defines an “expenditure” as any “purchase, payment, distribution, loan, advance, deposit, or gift of money or anything of value, made by any person” for the purpose of influencing a federal election. 2 U.S.C. § 431(9)(A); 11 CFR 100.111(a). As an incorporated entity, Citizens United may use its treasury funds to make certain types of expenditures, but cannot coordinate its expenditures with a federal candidate or committee. [FN1] Doing so would result in a corporate contribution, which is prohibited under the Act. 2 U.S.C. § 441b.

Commission regulations state that unless specifically exempted, “the provision of any goods or services without charge or at a charge that is less than the usual and normal charge for the goods or services is an expenditure.” 11 CFR 100.111(e) (1). “Usual and normal charge” is defined as the price of goods in the market from which they ordinarily would have been purchased at the time of the contribution, or the commercially reasonable rate prevailing at the time the services were rendered. 11 CFR 100.52(d)(2).

Since Citizens United currently rents its email list to other organizations at fair market prices, it may rent the list to federal candidates and political committees on the same terms without making an expenditure.

Citizens United’s rental of its e-mail list will also not constitute a “coordinated communication,” which is prohibited by corporations. To determine if a communication constitutes a “coordinated communication,” Commission regulations apply a three-prong test. First, the communication must be paid for, in whole or in part, by a person other than the candidate, the candidate’s authorized committee, or the political party committee with whom it was coordinated (the “payment prong”). 11 CFR 109.21(a)(1). Commission regulations also apply a “content prong” and a “conduct prong.” 11 CFR 109.21(a)(2) and (c); 11 CFR 109.21(a)(3) and (d) (1)-(5). All three prongs must be met in order for a communication to be considered “coordinated.”

Under the Commission’s coordination test, the payment prong would not be met since Citizens United will charge any federal candidate or political committee the usual and normal charge for the rental of the email list.

AO 2010-30: Date issued: December 23, 2010; Length: 5 pages.

FOOTNOTE:

1 Prior to last year’s Supreme Court decision in Citizens United v. FEC, corporations were prohibited from making expenditures. 558 U.S. __, 130 S. Ct. 876 (2010).