Notice of proposed rulemaking on electioneering communications (2005)

On August 18, 2005, the Commission approved a Notice of Proposed Rulemaking (NPRM) seeking comments on proposed changes to its rules defining “electioneering communications.” The proposed changes would modify the definition of “publicly distributed” and the exemptions to the definition of “electioneering communications,” consistent with the U.S. District Court for the District of Columbia’s ruling in Shays v. FEC. In that decision the court ruled that the regulation limiting electioneering communications to communications publicly distributed “for a fee” exceeded the Commission’s statutory authority to create exemptions and that the regulation exempting section 501(c)(3) organizations was not properly promulgated under the Administrative Procedure Act (APA).

Background

Generally speaking, electioneering communications are broadcast, cable or satellite communications that refer to a clearly identified federal candidate, are publicly distributed within 60 days before a general election or 30 days before a primary election and are targeted to the relevant electorate. 2 U.S.C. §434(f)(3)(A)(i) and 11 CFR 100.29(a)(1)-(3). In the Bipartisan Campaign Reform Act of 2002 (BCRA), Congress exempted certain communications from the definition of “electioneering communications,” and specifically authorized the Commission to promulgate regulations exempting other communications as long as the exempted communications do not promote, attack, support or oppose (PASO) a federal candidate. 2 U.S.C. §434(f)(3)(B)(iv).

Communications distributed for a fee

In its electioneering communications rules, the Commission defined “publicly distributed” as “aired, broadcast, cablecast or otherwise disseminated for a fee through the facilities of a television station, radio station, cable television system, or satellite system.” 11 CFR 100.29.

The district court, however, found that the “for a fee” qualifier exceeded the Commission’s statutory authority because it could potentially exempt communications that PASO a federal candidate. As a result, the Commission proposes eliminating the phrase “for a fee” from the definition of “publicly distributed,” and requests comments on such issues as whether this approach would require extensive monitoring of radio and television programs to ensure that communications either fit the statutory press exemption or otherwise avoid meeting the definition of electioneering communication.

As an alternative, the Commission is considering a proposal to delete the phrase “for a fee” from the “publicly distributed” definition while also including a new exemption for communications that are not distributed for a fee and do not PASO a federal candidate. The Commission requests comments on this proposal. Moreover, it specifically asks whether it needs to provide some definition of PASO for this exemption, or any of the proposed exemptions discussed in the NPRM, to be meaningful and explicable to the regulated community, or whether the PASO standard is self-executing and understandable without further definition by the Commission.

Exemption for 501(c)(3) organizations

The Commission also exempted from the definition of “electioneering communications” communications paid for by a 501(c)(3) organization. 11 CFR 100.29(c)(6). The district court found in Shays v. FEC that this exemption violates the APA because the explanation and justification for the rule did not address the “compatibility” of the Internal Revenue Service’s enforcement of the section 501(c)(3) prohibition on political activity with the requirements of the Federal Election Campaign Act (the Act). Specifically, the court found that the Commission did not discuss:

• Whether public communications that PASO a federal candidate would be viewed by the IRS as political activity that is prohibited for 501(c)(3) organizations;
• The risk, if any, that limited lobbying activity permitted for 501(c)(3) organizations could give rise to ads that PASO a federal candidate; and
• The implications of allowing the IRS to “take the lead in campaign finance law enforcement.”

If the Commission decides to keep the exception for 501(c)(3) organizations, it will need to make a finding based on a well-developed record regarding these three areas of concern. The Commission requests data regarding these issues, including information on how 501(c)(3) organizations generally operate under the tax code. The Commission also requests information concerning how 501(c)(3) organizations functioned under the Commission’s existing rule during the last election cycle, in order to build an administrative record that might support the rule.

In addition, the NPRM proposes amending the current rule to provide an exemption for communications by 501(c)(3) organizations provided that the communications do not PASO a federal candidate and are not paid for by a 501(c)(3) organization that is directly or indirectly established, financed, maintained or controlled by a federal candidate or officeholder. The Commission asks whether limiting the exemption to non-PASO communications adequately address the court’s concerns because the exemption would no longer turn on the IRS’s view of political activities. The Commission also seeks information concerning whether it is common for federal candidates or officeholders to establish, finance, maintain or control 501(c)(3) organizations and whether there is a greater likelihood that such organizations would pay for communications that PASO federal candidates.

Other alternatives

As alternatives to these proposed modifications to the current section 501(c)(3) exemption, the Commission is also considering two additional options. First, it could repeal both the 501(c)(3) exemption and the regulatory exemption for certain communications made by state and local candidates. 11 CFR 100.29(c)(5) and (c)(6). Instead, the Commission would rely only on the exemptions that Congress created in the BCRA, which include an exemption for certain materials appearing in a news story, editorial or commentary, communications that are a reportable expenditure or independent expenditure and candidate debates. Second, the Commission could exempt from the definition of electioneering communication all communications that do not PASO a federal candidate. This proposal would employ the exemption authority authorized by Congress to its fullest extent. The Commission requests comments on either of these two proposals.

Petition for rulemaking to exempt ads promoting films, books and plays

The Commission has also granted a related Petition for Rulemaking that asks the Commission to revise its electioneering communication rules to exempt ads for political documentary films, books and plays.1

The premise for the Petition is that ads for such films, books and plays would not be covered by the statutory exemption for communications “appearing in a news story,commentary, or editorial distributed through the facilities of any broadcast station.” 2 U.S.C. §434(f)(3)(B) and 11 CFR 100.29(c)(2).

Having considered the comments it received, the Commission proposes to amend its regulations to exempt communications promoting movies, books or plays, as long as the communications are run within the ordinary course of business of the persons that pay for such communications and the communications do not PASO a federal candidate. The Commission seeks comments on a number of issues concerning this proposal. For example, the Commission asks whether the exemption should be based on the actual or projected release date of the movie or book, so that it would only apply to movies or books that are shown during, or are released within six months of, the electioneering communications window. The Commission also questions whether the proposed rule appropriately limits the exemption to persons who pay for such communications in the ordinary course of their business. Finally, the Commission seeks information concerning the burden such a rule would place on advertisers and how advertisers responded to the Commission's existing rule during the last election cycle.

Comments

All comments must be addressed to Ms. Mai T. Dinh, Assistant General Counsel, and submitted in either electronic, fax or hard copy form by September 30, 2005. Commenters are strongly encouraged to submit comments electronically to ensure timely receipt and consideration. Hard copy comments should be sent to the Federal Election Commission, 999 E Street NW, Washington, DC 20463. Faxed comments should be sent to 202-219-3923, with a hard copy follow-up to insure legibility. Electronic mail comments should be sent to ECdef@fec.gov or submitted through the Federal eRegulations Portal at www.regulations.gov. All comments must be submitted in writing and include the full name and postal service address of the commenter. Comments that do not contain this information will not be considered.

Public hearing

The Commission will hold a hearing on the proposed rules on October 19 and, if necessary, October 20. Anyone wishing to testify at the hearing must file written comments by the due date and must include a request to testify in their comments.

Additional information

The NPRM was published in the August 24, 2005, Federal Register (70 FR 49508) and is available on the FEC website.

Footnote:

1 The Notice of Availability was published in the Federal Register (69 FR 52461). The Commission received seven comments.