Murtha's hometown paper: refuses to put anti-Murtha editorial online (written by locals!)

Try these:

From WSJ Opinion Journal:

McCain-Feingold Online
Will the FEC make bloggers kiss the First Amendment goodbye?

Wednesday, March 23, 2005 12:01 a.m. EST
When it comes to the law of unintended consequences, the McCain-Feingold campaign-finance "reform" is rapidly becoming a legal phenomenon. The latest example comes courtesy of the Federal Election Commission, where officials are being asked to extend the law to the very people it is supposed to empower: individual citizens.
We'd like to say we're surprised, but this was always going to be the end result of a law that naively believed it could ban money from politics. Since 2003, when the Supreme Court upheld it, McCain-Feingold has failed spectacularly in its stated goal of reining in fat-cat donors. Yet its uncompromising language has helped to gag practically every other politically active entity--from advocacy groups to labor unions. Now the FEC is being asked to censor another segment of society, the millions of individuals who engage in political activity online.
The problem facing the FEC is that McCain-Feingold broadly restricts coordination with, and contributions to, political candidates. So what is the agency to do with all those people who use their Web sites to praise a candidate? Computers and Web access cost money, which could be construed as a financial contribution to a campaign. Ditto bloggers who link to politicians' Web sites, or any individual who forwards a candidate's press release to a list of buddies. All this is to say nothing of blogs that are affiliated with political campaigns and coordinate their activities.

To its credit, the FEC tried to avoid this headache in 2002 by exempting the Internet from campaign-finance rules. This proved far too sensible for the sponsors of the law, who sued the commission for allowing "loopholes" and got a federal judge to strike down the exemption. The FEC must now decide just how it intends to monitor and penalize all those attempting to corrupt the U.S. political system via modem.
An idea kicking around the FEC a few years ago would require government to calculate the percentage of individuals' electricity bills that went toward political advocacy (we aren't joking). Another alternative would be to classify all bloggers as journalists, seeing as how the press is about the only entity exempt from McCain-Feingold. As much we enjoy our profession, we think a nation of journalists is overkill.
One of the more exciting things about last year's elections was how the Internet galvanized voter interest and turnout--from the Howard Dean grassroots movement to the bloggers who kept Dan Rather on his toes. Some 75 million Americans are estimated to have used the Internet to get political information in 2004. Too bad the very law that was supposed to encourage this buzz may ultimately be its demise.

From Internet News:

November 2, 2005
House to Vote on Political Blogging Rules
By Roy Mark

UPDATED: The U.S. House of Representatives delayed until at least Thursday a vote on whether the Internet and, in particular, political bloggers should be exempt from campaign finance laws.
Rep. Jeb Hensarling (R-Tex.) introduced his Online Freedom of Speech Act shortly after 3 p.m. After a brief debate, the House put off voting on the measure. A spokesman for Hensarling's office said the bill is likely to be considered again Thursday afternoon.
Hensarling's bill would relieve political bloggers from any provisions of campaign finance laws, no matter the blogger's financial connection to a campaign. Nevada Democrat Harry Reid is sponsoring identical legislation in the U.S. Senate.
"In today's e-society, Websites and blogs are quickly becoming the most popular and efficient way for people to communicate, express their views and debate the merits of candidates and causes," Hensarling said in a statement. "Clearly, we ought to embrace these newcomers to our political process instead of applying additional complex and stifling regulatory burdens.
Hensarling added, "Within the next few weeks, the FEC is expected to finalize rules and regulations that could squash not only free speech and political activism, but also impede innovation and technology, unless Congress acts now."
The new FEC regulations leave political blogs created and maintained by individuals exempt from the Bipartisan Campaign Reform Act (BCRA) of 2002 but they do cover uses of the Internet involving substantial monetary transactions such as advertising.
The BCRA set limits on how individuals, small businesses and corporations can pay print, radio and television outlets for political "public communications" that are coordinated with political campaigns.
Others, however, are concerned that passage of the bill will open a giant loophole for backdoor soft money to pour through the Internet.
The BCRA does not target the Internet as an area of regulation and when the Federal Election Commission (FEC) issued definitions and rules to implement the law, it specifically exempted the Internet from any provisions of the BCRA.
That made bloggers and other free speech advocates happy until a federal court ruled the FEC's interpretation of the law was too broad. While the FEC has redrafted the rules to limit the impact of the BCRA on the Internet, certain provisions do, in fact, affect bloggers.
The proposed regulations also fine-tune the FEC's current disclaimer rules requirements for certain political e-mail.
Currently, the FEC requires disclaimers if 500 substantially similar unsolicited e-mails are sent. The FEC's refinement defines unsolicited e-mail as that sent to lists purchased from third parties.
According to the FEC, the new e-mail proposal is meant to ensure that the regulations only cover spam and not communications to large groups of an individual's own personal contacts.
That's not a bad thing, said Rep. Christopher Shays (R-Conn.).
"We understand that a number of bloggers are concerned that somehow campaign finance laws will prevent them from exercising their freedom of speech," Shays said in a Monday letter to House colleagues urging defeat of Hensarling's bill. "The reality is that FEC regulations can and should reaffirm that bloggers can continue to write freely and at the same time make sure paid political advertising is brought under the law.
Hensarling's bill, Shays contends, "Goes far beyond exempting bloggers and allows federal candidates and political parties to again make use of soft money in federal campaigns."
If Hensarling's bill ultimately becomes law, Shays said a member of Congress "could simply go to a large donor, corporation or union and control their spending of $1 million in soft money to pay for political advertising all over the Internet."
Shays added that a desire to help bloggers "is no excuse to roll back existing law banning soft money in federal campaigns."
Hensarling remained unmoved Tuesday afternoon by Shays' arguments.
"In an age when only about 60 percent of eligible Americans bother to vote, any reasonable person would agree that the federal government should be encouraging more people to get active in the political process and to have their voices heard," he said. "Unfortunately, quite the opposite is happening."
He warned, "New federal campaign finance regulations could actually end up stifling political speech and threatening Americans' constitutional rights. Today the newest battlefield in the fight to protect the First Amendment is the Internet."

From CNET News:

Newsmaker: The coming crackdown on blogging
By Declan McCullagh
Staff Writer, CNET News.com

Published: March 3, 2005, 4:00 AM PST
TalkBack E-mail Print
See all Newsmakers
Bradley Smith says that the freewheeling days of political blogging and online punditry are over.
In just a few months, he warns, bloggers and news organizations could risk the wrath of the federal government if they improperly link to a campaign's Web site. Even forwarding a political candidate's press release to a mailing list, depending on the details, could be punished by fines.
Smith should know. He's one of the six commissioners at the Federal Election Commission, which is beginning the perilous process of extending a controversial 2002 campaign finance law to the Internet.
In 2002, the FEC exempted the Internet by a 4-2 vote, but U.S. District Judge Colleen Kollar-Kotelly last fall overturned that decision. "The commission's exclusion of Internet communications from the coordinated communications regulation severely undermines" the campaign finance law's purposes, Kollar-Kotelly wrote.
Smith and the other two Republican commissioners wanted to appeal the Internet-related sections. But because they couldn't get the three Democrats to go along with them, what Smith describes as a "bizarre" regulatory process now is under way.
CNET News.com spoke with Smith about the Bipartisan Campaign Reform Act of 2002, better known as the McCain-Feingold law, and its forthcoming extrusion onto the Internet.
Q: What rules will apply to the Internet that did not before?
A: The commission has generally been hands-off on the Internet. We've said, "If you advertise on the Internet, that's an expenditure of money--much like if you were advertising on television or the newspaper."
Do we give bloggers the press exemption?
The real question is: Would a link to a candidate's page be a problem? If someone sets up a home page and links to their favorite politician, is that a contribution? This is a big deal, if someone has already contributed the legal maximum, or if they're at the disclosure threshold and additional expenditures have to be disclosed under federal law.
Certainly a lot of bloggers are very much out front. Do we give bloggers the press exemption? If we don't give bloggers the press exemption, we have the question of, do we extend this to online-only journals like CNET?
How can the government place a value on a blog that praises some politician?
How do we measure that? Design fees, that sort of thing? The FEC did an advisory opinion in the late 1990s (in the Leo Smith case) that I don't think we'd hold to today, saying that if you owned a computer, you'd have to calculate what percentage of the computer cost and electricity went to political advocacy.
It seems absurd, but that's what the commission did. And that's the direction Judge Kollar-Kotelly would have us move in. Line drawing is going to be an inherently very difficult task. And then we'll be pushed to go further. Why can this person do it, but not that person?
How about a hyperlink? Is it worth a penny, or a dollar, to a campaign?
I don't know. But I'll tell you this. One thing the commission has argued over, debated, wrestled with, is how to value assistance to a campaign.
Corporations aren't allowed to donate to campaigns. Suppose a corporation devotes 20 minutes of a secretary's time and $30 in postage to sending out letters for an executive. As a result, the campaign raises $35,000. Do we value the violation on the amount of corporate resources actually spent, maybe $40, or the $35,000 actually raised? The commission has usually taken the view that we value it by the amount raised. It's still going to be difficult to value the link, but the value of the link will go up very quickly.
Then what's the real impact of the judge's decision?
The judge's decision is in no way limited to ads. She says that any coordinated activity over the Internet would need to be regulated, as a minimum. The problem with coordinated activity over the Internet is that it will strike, as a minimum, Internet reporting services.
They're exempt from regulation only because of the press exemption. But people have been arguing that the Internet doesn't fit under the press exemption. It becomes a really complex issue that would strike deep into the heart of the Internet and the bloggers who are writing out there today. (Editor's note: federal law limits the press exemption to a "broadcasting station, newspaper, magazine or other periodical publication." )
How do you see this playing out?
There's sensitivity in the commission on this. But remember the commission's decision to exempt the Internet only passed by a 4-2 vote.
This time, we couldn't muster enough votes to appeal the judge's decision. We appealed parts of her decision, but there were only three votes to appeal the Internet part (and we needed four). There seem to be at least three commissioners who like this.
Then this is a partisan issue?
Yes, it is at this time. But I always point out that partisan splits tend to reflect ideology rather than party. I don't think the Democratic commissioners are sitting around saying that the Internet is working to the advantage of the Republicans.
One of the reasons it's a good time to (fix this) now is you don't know who's benefiting. Both the Democrats and Republicans used the Internet very effectively in the last campaign.
What would you like to see happen?
I'd like someone to say that unpaid activity over the Internet is not an expenditure or contribution, or at least activity done by regular Internet journals, to cover sites like CNET, Slate and Salon. Otherwise, it's very likely that the Internet is going to be regulated, and the FEC and Congress will be inundated with e-mails saying, "How dare you do this!"
What happens next?
It's going to be a battle, and if nobody in Congress is willing to stand up and say, "Keep your hands off of this, and we'll change the statute to make it clear," then I think grassroots Internet activity is in danger. The impact would affect e-mail lists, especially if there's any sense that they're done in coordination with the campaign. If I forward something from the campaign to my personal list of several hundred people, which is a great grassroots activity, that's what we're talking about having to look at.
Senators McCain and Feingold have argued that we have to regulate the Internet, that we have to regulate e-mail. They sued us in court over this and they won.
If Congress doesn't change the law, what kind of activities will the FEC have to target?
We're talking about any decision by an individual to put a link (to a political candidate) on their home page, set up a blog, send out mass e-mails, any kind of activity that can be done on the Internet.
Again, blogging could also get us into issues about online journals and non-online journals. Why should CNET get an exemption but not an informal blog? Why should Salon or Slate get an exemption? Should Nytimes.com and Opinionjournal.com get an exemption but not online sites, just because the newspapers have a print edition as well?
Why wouldn't the news exemption cover bloggers and online media?
Because the statute refers to periodicals or broadcast, and it's not clear the Internet is either of those. Second, because there's no standard for being a blogger, anyone can claim to be one, and we're back to the deregulated Internet that the judge objected to. Also I think some of my colleagues on the commission would be uncomfortable with that kind of blanket exemption.
So if you're using text that the campaign sends you, and you're reproducing it on your blog or forwarding it to a mailing list, you could be in trouble?
Yes. In fact, the regulations are very specific that reproducing a campaign's material is a reproduction for purpose of triggering the law. That'll count as an expenditure that counts against campaign finance law.
This is an incredible thicket. If someone else doesn't take action, for instance in Congress, we're running a real possibility of serious Internet regulation. It's going to be bizarre.

From CRS:
CRS Report for Congress
Received through the CRS Web
Order Code RS22272
September 20, 2005
Campaign Finance Reform: Regulating
Political Communications on the Internet
L. Paige Whitaker
Legislative Attorney
American Law Division
Joseph E. Cantor
Specialist in American National Government
Government and Finance Division
Summary
The Bipartisan Campaign Reform Act of 2002 (BCRA) amended the Federal
Election Campaign Act (FECA) to include a new term, “federal election activity,” in
order to expand the scope of federal campaign finance regulation. The definition of
“federal election activity” includes a “public communication,” i.e., a broadcast, cable,
satellite, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone
bank communication made to the general public, “or any other form of general public
political advertising.” In October 2002, the Federal Election Commission (FEC)
promulgated regulations exempting from the definition of “public communication” those
communications that are made over the Internet. In response to the FEC’s final rules,
the two primary House sponsors of BCRA filed suit in U.S. district court against the
FEC seeking to invalidate the regulations as opening a new avenue for circumvention
of federal campaign finance law. In September 2004, in Shays v. FEC, the U.S. District
Court for the District of Columbia overturned some of the FEC’s new regulations. In
response to the district court’s decision, in April 2005, the FEC published proposed new
rules in order to conform to the Shays ruling. The proposed regulations reflect an
attempt by the FEC to leave web logs, or “blogs,” created and wholly maintained by
individuals, free of regulations under FECA, while extending limited regulation only to
uses of the Internet involving substantial monetary transactions.
CRS-2
1 P.L. 107-155 (2002).
2 2 U.S.C. § 431 et seq.
3 2 U.S.C. § 431(20).
4 2 U.S.C. § 431(22).
5 Regulated “federal funds,” also known as “hard money,” are funds that are subject to the
limitations, prohibitions, and reporting requirements of FECA. See 11 CFR § 300.2(k).
6 “The term public communication shall not include communications over the Internet.” 11 CFR
§ 100.26 (2005).
7 Electioneering Communications, 67 Fed. Reg. 65,190 (2002).
Background
The Bipartisan Campaign Reform Act. The Bipartisan Campaign Reform Act
of 2002 (BCRA)1 amended the Federal Election Campaign Act (FECA)2 to include a new
term, “federal election activity,” in order to expand the scope of federal campaign finance
regulation. BCRA defines “federal election activity” to include (1) voter registration
drives in the last 120 days of a federal election; (2) voter identification, get-out-the vote
drives (GOTV), and generic activity in connection with an election in which a federal
candidate is on the ballot; (3) “public communications” that refer to a clearly identified
federal candidate and promote, support, attack, or oppose a candidate for that office
(regardless of whether the communications expressly advocate a vote for or against); and
(4) services by a state or local party employee who spends at least 25% of paid time in a
month on activities in connection with a federal election.3 BCRA further defines “public
communication” as a broadcast, cable, satellite, newspaper, magazine, outdoor advertising
facility, mass mailing, or telephone bank communication made to the general public, “or
any other form of general public political advertising.”4 Therefore, under BCRA, state,
district, and local political parties can only use hard, regulated federal funds5 to pay for
certain types of “federal election activity.”
In October 2002, the FEC promulgated regulations, at 11 C.F.R. § 100.26,6
exempting from the definition of “public communication” those communications that are
made over the Internet. In its explanation and justification of the final rule, the FEC
stated:
The Internet is included in the list of exceptions in the final rules in section
100.29(c)(1) because, in most instances, it is not a broadcast, cable, or satellite
communication. BCRA's legislative history ... establishes Congress’s intent to
exclude communications over the Internet from the electioneering communication
provisions. The Commission concludes that Congress did not seek to regulate the
Internet in subtitle A of Title II of BCRA. The relatively few commenters who
opposed the Internet exemption did not disagree with this conclusion; rather, they
argued that as the Internet develops, aspects of it might come to be used in a manner
like radio or television. To these commenters, this potential evolution of the Internet
calls for a more precise approach and makes the exemption as proposed too broad a
treatment of this issue. The Commission has decided to include the exemption in the
final rules, rather than attempt to craft a regulation that responds to unknown, future
developments.7
CRS-3
8 337 F. Supp. 2d 28 (D.D.C. 2004), aff’d, No. 04-5352, 2005 WL 1653053 (D.C. Cir. July 15,
2005).
9 Id. at 69.
10 Id. at 67.
11 Id. at 70.
12 Id. at 112.
13 Id. at 62, quoting McConnell v. FEC, 124 S. Ct. 619, 705 (2003).
14 Id. at 65.
15 Id.
Shays v. FEC. In response to the FEC’s final rules, the two primary sponsors of
BCRA in the House of Representatives, Congressmen Shays and Meehan, filed suit in
U.S. district court against the FEC. In seeking to invalidate the regulations, the plaintiffs
argued, inter alia, that by not regulating Internet activities, the FEC is opening a new
avenue for circumvention of federal campaign finance law, contrary to Congress’s intent
in enacting BCRA. In September 2004, in Shays v. FEC,8 the U.S. District Court for the
District of Columbia agreed with the BCRA sponsors and overturned some of the FEC’s
new regulations.
The Shays court held that excluding all Internet communications from the FEC rule
defining “public communication,” at 11 CFR § 100.26, was inconsistent with Congress’s
use of the phrase, “or any other form of general public political advertising,” in the BCRA
definition of “public communication.” Further, the court found that the FEC had failed
to provide legislative history that would persuade the court to ignore the plain meaning
of the statute.9 While not all Internet communications fall within the phrase, “any other
form of general public political advertising,” the court observed that “some clearly do.”10
However, the court left it to the FEC to determine precisely what constitutes “general
public political advertising” in the context of the Internet.11 Furthermore, while the court
specifically upheld the definition of “generic campaign activity” as a “public
communication,” it found that the 2002 Notice of Proposed Rulemaking (NPRM) failed
to provide adequate notice to the public, under the Administrative Procedure Act (APA),
that the FEC might establish such a definition. As the court noted, it could not “fathom
how an interested party ‘could have anticipated the final rulemaking from the draft
rule.’”12
The Shays court also found that the FEC rule exempting Internet communications
from the definition of “public communications” meant that no matter how closely such
communications are coordinated with political parties or candidate campaigns, they
cannot be considered “coordinated communications” and hence, subject to FECA
regulation. As the court observed, it has long been a tenet of campaign finance law that,
in order to prevent circumvention of regulation, FECA treats expenditures that are made
“in cooperation, consultation, or concert, with or at the suggestion of a candidate” as a
contribution to such candidate.13 According to the court, the exclusion of Internet
communications from coordinated communications contrasts with prior FEC rules and
was contrary to Congress’s intent in enacting the statute.14 The court remanded the case
for further action consistent with its decision.15
CRS-4
16 Internet Communications, 70 Fed. Reg. 16,967 (2005).
17 Id., at 16,969.
FEC Internet Rulemaking
In response to the district court’s decision, on April 4, 2005, the FEC published a
NPRM seeking comment on its proposal to amend the definition of “public
communication” to conform to the Shays v. FEC ruling.16 The comment period closed
on June 3, 2005, and a public hearing was held June 28 and 29, 2005. It is anticipated that
once the FEC promulgates its final regulations, perhaps at the end of this year, many of
the new regulations are likely to be once again challenged in court, by supporters of
BCRA if they are perceived as too lax, and by free speech advocates if they are viewed
as too burdensome on political speech.
In its NPRM, the FEC requested comments on proposed rules to include paid
advertisements on the Internet in the definition of “public communication.” In addition,
the FEC sought comment on the related definition of “generic campaign activity,” on
proposed changes to the disclaimer regulations, and on proposed exceptions to the
definitions of “contribution” and “expenditure” for certain Internet activities and
communications that would qualify as individual volunteer activity or that would qualify
for the “press exemption.” According to the FEC, the proposed rules are intended to
ensure that political committees properly finance and disclose their Internet
communications, without impeding individual citizens from using the Internet to speak
freely regarding candidates and elections.
Summary of Proposed Regulations. Specifically, the proposed regulations
reflect an attempt by the FEC to leave web logs, or “blogs,” created and wholly
maintained by individuals, free of regulations under FECA, while extending limited
regulation only to uses of the Internet involving substantial monetary transactions. As a
still evolving technology, the Internet poses many challenges for those regulating in this
area, not least of which is how to place a financial value on Internet communications. As
stated in its NPRM:
The Commission’s proposed rule attempts to strike a balance between provisions of
the Act that regulate “general public political advertising” and significant public
policy considerations that encourage the Internet as a forum for free or low-cost
speech and open information exchange.17
Key issues addressed in the proposed FEC regulations include:
! Definition of “public communication” — the new regulations would
amend the definition of “public communication” in 11 C.F.R. §100.26,
to include paid Internet ads placed on another individual’s or entity’s
website, as a form of “general public political advertising”;
! State and local party committees — while state and local party
committees must use entirely federal funds (i.e., regulated, hard money)
to pay for public communications that support, oppose, attack, or
promote federal candidates, the new regulations would continue FEC
CRS-5
policy of allowing them to make reference to federal candidates on their
websites without triggering a total federalization of the process;
! Disclaimer requirements — current rules for disclaimers (statements of
attribution) apply to any public communication, which in this context
includes more than 500 substantially similar, unsolicited e-mails sent
within a 30-day period. The new regulation would narrow the scope of
this requirement to apply only to e-mail addresses acquired through a
commercial transaction. Furthermore, as the changed definition of
“public communication” (above), disclaimers would be required on paid
Internet ads placed on another individual’s or entity’s website;
! Bloggers paid by candidates — the new regulations would leave intact
the policy of requiring payments to bloggers by candidates to be
disclosed on candidates’ disclosure statements only, with no disclaimers
of such required on blog sites;
! Coordinated communications — the FEC is not proposing any change
to 11 CFR §109.21 at this time, dealing with coordinated
communications, but by changing the definition of “public
communication” to include some Internet activity, the proposed
regulations would have an impact in this area. Thus, Internet ads placed
on the website of another person or entity for a fee and coordinated with
a candidate or party committee would be considered “coordinated
communications” and thus in-kind contributions to the candidate or
committee; in turn, the costs would be subject to contribution limits and
source prohibitions of FECA;
! Media exemption — current law generally exempts news stories,
commentaries, and editorials distributed through broadcasters,
newspapers, and periodicals from being considered “expenditures” under
FECA. The FEC is considering whether to extend this exemption to
media activities that occur over the Internet, such as activities by
bloggers. However, the proposed rules do not go this far, as some have
proposed, and merely clarify that any media activities now covered by
the media exemption would continue to be exempt when transmitted
over the Internet; and
! Exceptions for individual or volunteer activity on the Internet —
proposed rules would exclude from regulation, under the definitions of
“contribution” and “expenditure,” an uncompensated individual acting
independently or as a volunteer by using computer equipment or Internet
services in order to influence a federal election.
Congressional Activity
The subject of communications over the Internet was not addressed during the 107th
Congress’s consideration of BCRA in 2001 and 2002, when the law was enacted.
However, the subject was raised in debate on a previous version of what became BCRA
during House consideration of H.R. 417 (Shays-Meehan) in the 106th Congress. An
CRS-6
18 Bipartisan Campaign Reform Act of 1999. 145 CONG. REC. 21526 (Sept. 14, 1999).
amendment was offered to that bill by Representative DeLay to exempt communications
over the Internet from regulation under FECA. It was defeated by a vote of 160-268.18
During the 109th Congress, several bills have been proposed to exempt
communications over the Internet from the BCRA definition of “public communication,”
and thus regulation under FECA. These proposals include H.R. 1605 and H.R. 1606
(Hensarling) and S. 678 (Reid). Similar language was added to two bills reported from
House and Senate committees, which focus on the issue of 527 political organizations:
S. 1051 (McCain-Feingold-Lott), reported by the Senate Rules and Administration
Committee on May 17 as an original bill and placed on the Senate’s legislative calendar;
and H.R. 1316 (Pence-Wynn), reported by the House Administration Committee on June
22, 2005 (H.Rept. 109-146).

From Independent Sector:

Public Policy

Nonprofit Advocacy and Lobbying

Electioneering Communications

FEC Rejects Grassroots Lobbying Proposal
Grassroots lobbying proposal (PDF)...8/3/06Final Rule (PDF)...12/21/05FEC drops 501(c)(3) exemption...12/21/05IS Comments (PDF) ...9/30/05Shays v. FEC decision (PDF)....9/18/04FEC Guidance on Electioneering Communications

On August 29, 2006 the Federal Election Commission rejected by a 3-3 vote a proposal (PDF) that would have created a temporary grassroots lobbying exception to the current restrictions on nonprofit organizations that sponsor broadcast ads mentioning federal candidates in specified periods before an election. Commissioners opposed to the motion primarily argued it would be premature to issue a new rule before considering the final rulings of the three related pending federal court cases. The commissioners informally agreed to take the issue up again after the court cases conclude, but it is unlikely that an exemption/revised rule will be in place before the 2008 election season.
If adopted, the interim rule would have taken effect immediately but only for a year while the FEC decided whether or not to make it permanent. The rule change was proposed by one of the commissioners in response to a petition (PDF) filed in February 2006 by Alliance for Justice, OMB Watch, the U.S. Chamber of Commerce, AFL-CIO, and the National Education Association.
The current electioneering communications rule, created by the Bipartisan Campaign Reform Act (BCRA), prohibits nonprofit organizations from running broadcast ads that refer to a candidate for federal office within 30 days of a primary or 60 days of a general election. The FEC originally exempted communications from 501(c)(3) organizations from the rule, but dropped that exemption as a result of a court challenge in Shays v. FEC.
The proposal rejected on August 29 would have created a grassroots lobbying exemption allowing nonprofit organizations to broadcast issue ads that mention federal candidates in the upcoming election period if the candidates are current office holders, the communications discuss a pending public policy issue, do not refer to an election or political party, and do not promote, support, attack or oppose any candidate for federal office.

Current Rule -- FEC Drops 501(c)(3) Exemption
The FEC issued a final rule on electioneering communications on December 21, 2005, dropping a 501(c)(3) exemption that had been challenged in court.The FEC concluded that comments submitted by the public did not demonstrate "to a reasonable certainty" that the IRS restriction on political activity by 501(c)(3)s was sufficiently compatible with the Bipartisan Campaign Reform Act (BCRA) law to allow the exemption. IS filed comments in September 2005 urging the FEC to keep the exemption without a new "promote, support, attack, oppose" restriction.

The Commission also questioned the need for the exemption since no commenters provided any examples of broadcast ads by 501(c)(3)s that referred to a federal candidate. The final rule also changes the definition of electioneering communications so that it will now include public service announcements as well as communications that are broadcast for a fee. Final rule (PDF)
Independent Sector filed comments with the FEC in September 2005, urging the Commission to keep its current 501(c)(3) exemption from electioneering communications restrictions. The comments were in response to a proposed FEC rule that would change the type of issue ads nonprofits could broadcast around election time.
On August 24, 2005, the FEC issued a proposed rule in response to a District Court decision (Shays v. FEC) that sent back some of the agency's new campaign finance rules for revision. One of the rules that must be revised is the 501(c)(3) exemption from the electioneering communications regulations. Electioneering communications were defined in the original FEC rules as broadcast ads distributed for a fee that refer to a candidate for federal office aired within 30 days of a primary or 60 days of a general election. In addition to addressing the 501(c)(3) exemption, the Commission considered removing the phrase "for a fee" from the definition of electioneering communications to address the court’s concern that even public service announcements could be seen as promoting or supporting a candidate, and should therefore be subject to electioneering communications rules.
Among the options under consideration by the FEC were: narrowing the 501(c)(3) exemption; repealing it; or replacing it with a broad new exemption that covers all communications that do not "promote, support, attack or oppose" a federal candidate. The FEC is not proposing to further define the phrase "promote, support, attack or oppose."
At an October 20, 2005 hearing, the FEC considered how to revise its exemption for grassroots lobbying ads by 501(c)(3) organizations. Two panels of witnesses commented on the options under consideration by the FEC. Much of the discussion focused on whether the phrase "promote, support, attack or oppose" is so vague that charities would avoid lobbying ads completely rather than risk violating a regulation that contains that phrase. The Commissioners also took note of the fact that the U.S. Supreme Court will hear a case in early 2006 that challenges the constitutionality of the ban on grassroots lobbying ads during election times. Although the Commissioners discussed whether they should wait until the Supreme Court rules to revise their regulation, it did not appear that they were inclined to do so.
Background
The 501(c)(3) exemption from electioneering communications rules wass based on the fact that such organizations are already barred by tax law from intervening in political campaigns on behalf of or in opposition to any candidate. The District Court in Shays, however, found a lack of compatibility between the IRS' interpretation of the ban on political intervention on one hand, and campaign finance law's restrictions regarding electioneering communications on the other. The Court also found it unclear "whether or not the IRS will conform its views on political activity under the tax laws to those regulated in the realm of campaign finance law," and that the FEC did not sufficiently address whether the IRS could effectively enforce the restrictions required by campaign finance law. The notice of proposed rulemaking lists three specific omissions from the FEC's record that were identified by the Court:
(1) it did not discuss whether or not public communications that promote, support attack or oppose a federal candidate would be viewed by the IRS as political activity in which section 501(c)(3) organizations may not engage;
(2) it did not discuss the risk, if any, that limited lobbying activity permitted for section 501(c)(3) organizations could give rise to advertisements that promote, support attack or oppose a federal candidate; and,
(3) it did not address the implications of allowing the IRS "to take the lead in campaign finance law enforcement."
The FEC attempted with this rulemaking to address the Court's concerns listed above. In the notice of proposed rulemaking, the FEC reviewed comments it received in 2002 on this issue, including Independent Sector's comment that the IRS vigorously enforces the 501(c)(3) prohibition on intervention in political campaigns. However, the FEC also cites a 2002 GAO report that found that the IRS lacks the resources for adequate oversight and enforcement, and needs to improve monitoring of 501(c)(3) compliance. The FEC specifically requested "comments and other reports, documents or evidence" on the appropriateness of continuing to defer to IRS determinations in this area. The FEC also states that if it decides to keep a 501(c)(3) exemption, it must make a finding on a well-developed record that such organizations cannot make communications that promote, support, attack or oppose a federal candidate when acting lawfully within their tax status as a 501(c)(3).

Shays v. Meehan Decision
A U.S. District Court Judge ruled on September 18, 2004 that some of the Federal Election Commission's regulations do not adequately enforce the Bipartisan Campaign Reform Act (BCRA). One of the rules that Judge Kollar-Kotelly sent back to the FEC for further action is the exemption of 501(c)(3) organizations from the regulations governing electioneering communications (i.e., broadcast ads referring to a candidate for federal office that are aired within 30 days of a primary or 60 days of a general election). The FEC based its exemption on the fact that 501(c)(3) organizations are already barred by the Internal Revenue Code from participating or intervening in political campaigns on behalf of or in opposition to any candidate. In her ruling, Judge Kollar-Kotelly noted a lack of compatibility between the IRS’ interpretation of the ban on political activity by 501(c)(3)s and BCRA’s requirements regarding electioneering communications. She said that it is unclear “whether or not the IRS will conform its views on political activity under the tax laws to those regulated in the realm of campaign finance law,” and that the FEC did not sufficiently address whether the IRS could effectively enforce the restrictions required by campaign finance law.

In striking down 15 of 19 regulations challenged by Representatives Chris Shays and Martin Meehan, Judge Kollar-Kotelly found that some of the FEC’s rules actually undermine BCRA. The FEC will appealed some portion of the judge's ruling, and is making revisions to the regulations to address other portions. (full opinion PDF)

FEC Electioneering Communications Rule Approved in 2002
The electioneering communications regulations approved by the FEC on October 10, 2002 included the following provisions:
· The general definition of "electioneering communications," supported by IS, remained unchanged, except that it was modified to require that the communication be publicly distributed "for a fee" in order to exempt unpaid communications, as proposed by IS and others. The explanation to the regulations clarifies that "for a fee" is limited to a fee for the distribution (i.e., airtime), and does not include the costs of producing a communication.
· An exception for communications paid for by any organization operating under section 501(c)(3) was added.
· Communications clearly referring to presidential or vice presidential candidates are only electioneering communications with respect to primary elections (including conventions and caucuses) if they reach 50,000 people in the state where the primary is being held 30 days before the primary, a position supported by IS. Such communications are also electioneering communications if aired anywhere in the nation between 30 days of the start of a national convention and the conclusion of the convention, a position opposed by IS.
· The exceptions for print media, the Internet, news stories, commentaries and editorials, and candidate debates, all supported by IS, remained unchanged. The explanation to the regulations also clarifies, as IS requested, that the type of equipment used to access the Internet is irrelevant.
· The proposed exceptions for lobbying communications and for communications mentioning the popular name of legislation, which IS supported in certain forms, were deleted.
· The explanation to the regulations states that the FEC accepts the proposition, supported by IS, that non-financial affiliations between organizations, even if one organization is allowed to fund electioneering communications and the other is not, are permitted, as long as separate finances are maintained.
· A corporation or labor organization that provides funds that are then used for an electioneering communication will only have violated the prohibition on using such funds for such communications if it knew, had reason to know, or willfully blinds itself to the fact, that the funds would be so used.
· An organization that receives corporate or labor organization funds must be able to demonstrate through a reasonable accounting method that no such funds were used to pay for electioneering communications; a segregated bank account is not required, however.

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