Notice of proposed rulemaking on coordinated communications

On October 8, 2009, the Commission approved a Notice of Proposed Rulemaking (NPRM) proposing amendments to portions of its three part regulatory test for coordinated communications. 11 CFR 109.21. The NPRM also proposes adding a safe harbor to address certain public communications in which federal candidates endorse or solicit support for non-profit entities, as well as a safe harbor for certain commercial and business communications. Proposed 11 CFR 109.21(i) and (j). The Commission is undertaking this rulemaking to comply with the ruling in Shays v. FEC, 528 F.3d 914 (D.C. Cir. 2008) (Shays III Appeal), that invalidated aspects of the rules defining coordinated communications.

Background

As part of its rulemaking to implement the Bipartisan Campaign Reform Act of 2002 (BCRA), the Commission devised a three-prong test for determining whether a communication has been coordinated with a candidate or party, and thus results in an in-kind contribution. The test considers:

• The source of payment;
• The content of communication; and
• The conduct of those involved.

To be considered coordinated, the communication must satisfy all three prongs of the coordinated communication test.

In Shays III Appeal, the court invalidated a portion of the content prong of the test. To satisfy the content prong a communication must be:

• An electioneering communication;
• A public communication that republishes campaign materials;
• A public communication that expressly advocates; or
• A public communication that refers to a political party or clearly identified federal candidate and is publicly distributed within 90 or 120 days of the primary or general election.

The appeals court concluded that the Commission’s decision to apply “express advocacy” as the only content standard outside the 90-day and 120-day windows does not “rationally separate election-related advocacy from other activity falling outside FECA’s expenditure definition.” Shays III Appeal, 528 F.3d at 926.

In Shays III Appeal, the Court of Appeals also invalidated a portion of the conduct prong of the test. To fulfill the conduct prong, the communication must be created, produced, or distributed:

• At the request or suggestion of;
• After material involvement by; or
• After substantial discussion with, a candidate, a candidate’s authorized committee, or a political party committee; or
• The person paying for the communication contracts with, or employs, a “commercial vendor” to create, produce, or distribute the communication; and
• The commercial vendor provided services to the clearly identified candidate, that candidate’s authorized committee, the candidate’s opponent or his or her authorized committee or a political party committee referred to in the communication within the previous 120 days; and
• The commercial vendor conveys material information about the campaign or needs of the candidate to the person paying for the communication; or
• The communication is paid for by a person or the employer of a person, who has previously been an employee or an independent contractor of a candidate or the candidate’s authorized committee, the opponent or the opponent’s authorized committee, or a political party committee during the 120 days before the purchase or distribution of the communication; and
• The person must convey material information about the campaign or needs of the candidate to the person paying for the communication.

The first three elements were not at issue in Shays III Appeal. The Shays III Appeal court invalidated the 120-day period of time during which a common vendor’s or former campaign employee’s relationship with an authorized committee or political party committee could satisfy the conduct prong at 11 CFR 109.21(d)(4) and (d)(5). Shays III Appeal, 528 F.3d at 928-29.

Proposals

In response to the court’s decision, the Commission has proposed four possible modifications to the existing content standards in 11 CFR 109.21:

1) Adopt a content standard to cover public communications that promote, attack, support or oppose (PASO) a political party or a clearly identified federal candidate. This alternative would amend 11 CFR 109.21(c) by replacing the express advocacy standard with the PASO standard. As part of its consideration of a PASO content standard, the Commission is also considering whether it should adopt a definition of PASO. The NPRM sets forth two possible approaches to defining PASO. Alternative A provides a specific definition for each of the component terms that would apply when any of those terms is used in conjunction with one or more of the other terms. Alternative B applies a multiprong test to determine whether a given communication PASOs. See Alternatives A & B at Proposed 11 CFR 100.23.

2) Adopt a content standard to cover public communications that are the “functional equivalent of express advocacy.” The proposed standard specifies that a communication is the “functional equivalent of express advocacy” if it “is susceptible of no reasonable interpretation other than as an appeal to vote for or against” a clearly identified federal candidate. See FEC v. Wisconsin Right to Life, 127 S.Ct. 2652, 2667 (2007).

3) Clarify the existing express advocacy content standard by providing a cross-reference to the express advocacy definition at 11 CFR 100.22.

4) Adopt a standard that pairs a public communication standard with a new conduct standard (the “Explicit Agreement” standard). This would require a formal or informal agreement between a candidate, candidate’s committee or political party committee and the person paying for the public communication. Either the agreement or the communication must be made for the purpose of influencing a federal election.

In response to the court’s decision regarding the conduct prong, the Commission has proposed three alternatives for the time periods specified in the common vendor and former employee conduct standards:

1) Retain the current 120-day period with the Commission providing additional justification for that time period. The Shays III Appeal court did not hold that the 120-day period was inherently improper, but rather that the Commission “must support its decision with reasoning and evidence…” Shays III Appeal, 528 F.3d at 929.

2) Amend 11 CFR 109.21(4) and (5) by deleting the phrase “the previous 120 days” and replacing it with “the two-year period ending on the date of the general election for the office or seat the candidate seeks.” The two-year period corresponds with the election cycle for the House of Representatives, the most common election cycle of those regulated by the Commission.

3) Replace the existing 120-day period with a “current election cycle” period. “Current election cycle” is defined in current Commission regulations as beginning “on the first day following the date of the previous general election for the office or seat which the candidate seeks…The election cycle shall end on the date on which the general election for the office or seat that the individual seeks is held.” 11 CFR 100.3(b).

Other issues.

Although not included in the Shays III Appeal ruling, the Commission is also considering adding a safe harbor to 11 CFR 109.21(i) to address certain public communications in which federal candidates endorse or solicit support for non-profit entities organized under 501(c)(3) of the Internal Revenue Code, or for public policies or legislative proposals espoused by those organizations. This proposed additional safe harbor would, under certain circumstances, enable a federal candidate to participate in such a public communication, without the communication being treated as an in-kind contribution to the candidate.

The Commission is also considering adding a new safe harbor at 11 CFR 109.21(j) for certain commercial and business communications. This proposed safe harbor would apply to any public communication in which a federal candidate is clearly identified only in his or her capacity as the owner or operator of a business that existed prior to the candidacy, so long as the public communication does not PASO that candidate or another candidate who seeks the same office, and so long as the communication is consistent with other public communications made prior to the candidacy in terms of the medium, timing, content and geographic distribution.

The Commission also seeks comment on whether it should issue an NPRM on the party coordinated communication regulation at 11 CFR 109.37, since that provision has a content prong that is substantially similar to the one for “coordinated communications” in 11 CFR 109.21(c). Also, the common vendor and former employee conduct standards of 11 CFR 109.21(d) that were struck down in Shays III Appeal are incorporated by reference in the party coordinated communication regulations. See 11 CFR 109.37(a)(3).

Comments

The NRPM was published in the October 21, 2009, Federal Register and is available on the FEC web site at http://transition.fec.gov/pdf/nprm/coord_commun/2009/notice_2009-23.pdf. The Commission strongly encourages comments, especially those that include empirical data.

All comments must be received on or before January 19, 2010. Comments must be in writing, addressed to Ms. Amy L. Rothstein, Assistant General Counsel, and submitted in either electronic, fax or hard copy form. Commenters are strongly encouraged to submit comments electronically to ensure timely receipt and consideration. Electronic comments should be sent to CoordinationShays3@fec.gov. If the electronic comments include an attachment, the attachment must be in Adobe Acrobat (.pdf) or Microsoft Word (.doc) format. Faxed comments should be sent to (202) 219-3923, with hard copy follow-up. Hard copy comments and hard copy follow-up of faxed comments should be sent to the Federal Election Commission, 999 E St. NW, Washington, DC 20463. All comments must include the full name and postal service address of the commenter or they will not be considered. The Commission will post comments on its website after the comment period ends.

A public hearing on the proposed rules will be held at a later date in the Commission’s ninth floor hearing room, 999 E St., NW, Washington, DC.