Public hearing on proposed rules for “electioneering communication”
On October 20, 2005, the Commission held a public hearing to receive testimony on proposed rules regarding “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). For more information on the NPRM see the October 2005 issue of the Record, page 6.
Seven witnesses, representing election law practitioners, tax law practitioners, campaign reform groups and section 501(c)(3) organizations testified before the Commission.
Distributed for a fee
Elizabeth Kingsley, from Harmon, Curran, Spielberg & Eisenberg LLP, testified that eliminating “for a fee” from the definition of “publicly distributed” may limit the ability of nonprofit organizations to create Public Service Announcements (PSAs). According to Ms. Kingsley, the nonprofit organizations that produce PSAs cannot control when broadcasters air the ads. Under the proposed rules, a PSA has the potential to become an “electioneering communication” if it is broadcast during the 30- or 60-day electioneering communications windows. Given that fact, Ms. Kingsley argued that the result of the proposed rules would be a reduction in officeholders’ ability to promote worthy causes through PSAs. She urged the Commission to consider an exemption for communications that are not distributed for a fee and do not promote, attack, support or oppose (PASO) a federal candidate. She also recommended that the Commission provide some definition of PASO to accompany this exemption.
Exemption for 501(c)(3)
Organizations Ms. Kingsley also argued against the proposal to repeal the Commission’s current rule exempting 501(c)(3) organizations from the definition of electioneering communications. According to her testimony, most 501(c)(3) organizations are concerned about complying with IRS laws and are not aware that they must comply with FEC regulations. Ms. Kingsley said that repealing the 501(c)(3) exemption would create a “chilling effect,” inhibiting 501(c)(3) organizations from free expression for fear of violating FEC laws.
Karl Sandstrom, representing OMB Watch, and Tim Mooney, from Alliance for Justice, also urged the Commission not to repeal the exemption. Mr. Sandstrom and Mr. Mooney both emphasized the importance of 501(c)(3) organizations’ non-political lobbying abilities. Mr. Sandstrom warned that repealing the 501(c)(3) exemption would infringe upon the organizations’ First Amendment right to petition government through grassroots lobbying. Mr. Mooney and Ms. Kingsley emphasized that it is already unlawful for 501(c)(3) organizations to support or oppose candidates under the IRS rules on exempt organizations. The IRS rules, however, do allow 501(c)(3) organizations to support or oppose legislation.
Donald J. Simon, representing Democracy 21, testified in support of repealing the exemption. He argued that the IRS rules on 501(c)(3) organizations’ activities lack clarity and that combining those rules with the Commission’s existing exemption has allowed ostensibly charitable 501(c)(3) organizations to become interventionists in elections. He and Paul Ryan, from the Campaign Legal Center, called on the Commission to repeal the 501(c)(3) exemption.
Similarly, Frances Hill, Professor of Law and Director of the Graduate Program in Taxation at the University of Miami School of Law, testified that a blanket exemption for 501(c)(3) organizations places the responsibility of regulation on the IRS, which is not equipped to handle the responsibility of regulating the political activity of 501(c)(3) organizations.
Exempting ads promoting films, books and plays
In response to a related Petition for Rulemaking, the Commission proposes to exempt from its electioneering communications rules ads promoting movies, books or plays, as long as they are run according to normal business practices and the communications do not PASO a federal candidate.
Mr. Sandstrom argued that ads for political films, books and plays do, in fact, PASO federal candidates. He thought it inappropriate to create an exemption for the advertising of political films, books and plays, while eliminating the 501(c)(3) exemption that allowed for bona fide grassroots lobbying.
On the other hand, Robert Bauer, from Perkins Coie LLP, expressed his support for an exemption. However, Mr. Bauer argued that the PASO requirement in the exemption was redundant and unnecessary because the Commission has the authority to decide that the exempted activities will not PASO.
Mr. Simon argued that an exemption for ads promoting political films, books and plays is not an exemption for the work of art, but an exemption for the promotion of the work of art. He advocated a bona fide commercial activity test for the ads relating to political movies, books and plays.
Additional information
The full text of the NPRM and public comments submitted to the Commission are available on the FEC website (REG 2005-04).