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FEC Record: Regulations

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Public Hearing on Independent Expenditures and Electioneering Communications by Corporations and Labor Organizations

On March 7, 2012, the Commission held a public hearing on proposed changes to its regulations concerning independent expenditures and electioneering communications by corporations and labor organizations. The Commission published a Notice of Proposed Rulemaking (NPRM) in the December 27, 2011, Federal Register seeking public comment on proposed changes to amend the FEC’s regulations to comply with the Supreme Court’s decision in Citizens United v. FEC. The NPRM responds to a Petition for Rulemaking from the James Madison Center for Free Speech.

After the Supreme Court’s decision in Citizens United, the FEC released a statement saying that it would no longer enforce statutory provisions and regulations that prohibited corporations and labor organizations from making independent expenditures and electioneering communications. The NPRM proposes removing those regulations from Title 11 of the Code of Federal Regulations, and amending other regulations to comply with the court decision.

Commenters [fn1] at the hearing expressed support for removing the outdated regulations. James Bopp, representing the James Madison Center for Free Speech, said he was frustrated that invalidated regulations were still on the books.

Much of the hearing was spent discussing the Commission’s two proposed alternatives for revising 11 CFR 114.2(b)(2)(i), which prohibits corporations from making “expenditures.” Both approaches would implement the Citizens United decision by permitting corporations and labor organizations to make independent expenditures from their treasury funds. Alternative A would permit corporations and labor organizations to make all types of expenditures for non-coordinated activity regardless of whether they amount to communications. Thus, as long as the expenditures were not in-kind contributions, Alternative A would permit corporations and labor organizations to make expenditures for non-communicative expenditures such as transportation of volunteers to campaign events and voter registration drives. Alternative B would distinguish between permissible expenditures for communications and impermissible expenditures for “non-communicative” activity. The NPRM asked, for example, how the Commission should treat non-coordinated get-out-the-vote (GOTV) activities that might include both communicative and non-communicative elements.

The commenters at the public hearing generally spoke in favor of Alternative A. Michael Trister, representing the Alliance for Justice Action Campaign, argued that the First Amendment doesn’t differentiate between expenditures for communications and those for non-communicative activity. Allison Hayward of the Center for Competitive Politics said it is impossible to disentangle speech and action. She said the distinction should not be made between communicative and non-communicative expenditures, but between independent and coordinated expenditures.

Comments also focused on the NPRM’s proposed changes regarding the reporting of a corporation’s or labor organization’s express advocacy communications that reach both the organization’s restricted class and individuals outside the restricted class. Prior to Citizens United, corporations and labor organizations could make express advocacy communications only to their restricted classes. Payments for these restricted class communications were not considered “expenditures,” but could trigger certain reporting requirements. In Citizens United, the Supreme Court determined corporations and labor organizations have a constitutional right to make express advocacy communications to those outside their restricted classes, and the Court also upheld the requirement that certain independent expenditures be reported. The NPRM asked how corporations and labor organizations should report spending money on express advocacy communications that reach both the restricted class and the public.

Laurence Gold, speaking on behalf of the AFL-CIO, said the most practical approach would be to allow persons making express advocacy communications to both restricted class members and the general public to allocate those expenses between the two groups of recipients, and report them accordingly. Payments for express advocacy communications that do not specifically target the restricted class would need no allocation, he said, while payments for phone calls and direct mail could be allocated in a reasonable fashion.

Finally, the NPRM proposes removing regulations at 114.14 and 114.15 in their entirety, as these sections prohibit corporations and labor organizations from making payments for electioneering communications that are the functional equivalent of express advocacy. Jan Baran, appearing on behalf of the Chamber of Commerce of the United States, said the Commission should not remove the entirety of 11 CFR 114.15, which defines electioneering communications that are the functional equivalent of express advocacy as those communications that are “susceptible of no reasonable interpretation other than as an appeal to vote for or against a clearly identified federal candidate.” The regulation contains a multi-pronged test that could help the public understand whether their speech is the functional equivalent of express advocacy in the context of coordination, Mr. Baran said. 

The full text of the NPRM is available at: http://sers.fec.gov/fosers/showpdf.htm?docid=99892. More information about the public hearing, as well as audio recordings and public comments, can be found at: http://www.fec.gov/pages/hearings/corplabor_indexp_ec.shtml

FOOTNOTE

1 The commenters at the public hearing included: James Bopp, Jr., James Madison Center for Free Speech; Michael Trister, Alliance for Justice Action Campaign; Jan Baran, Chamber of Commerce of U.S.; Laurence Gold, AFL-CIO; and Allison Hayward, Center for Competitive Politics.

(Posted 3/14/12; By: Isaac Baker)

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The FEC Record is produced by the Information Division, Office of Communications. Toll free 800-424-9530; Local 202-694-1100; E-mail info@fec.gov. Greg Scott, Director; Amy Kort, Asst. Director; Dorothy Yeager, Editor