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FEC Record : Advisory Opinions

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AO 2011-24 LLC May Form Independent Expenditure-Only Committee

Louder Solutions, LLC d/b/a StandLouder.com (StandLouder.com) may form an “independent expenditure-only committee” for the purpose of accepting ad content, receiving contributions and funding independent expenditures as part of its proposed business model which would allow for users of StandLouder.com to create, post and fund certain political ads. However, the Commission could not approve by the required four votes whether StandLouder.com is a political committee, nor could it approve which disclosure and disclaimer requirements apply to StandLouder.com’s proposed advertisements.

Background

StandLouder.com is a for-profit limited liability company (LLC) established under the laws of North Carolina. It has a single natural person member and has not elected to be treated as a corporation by the IRS. StandLouder.com maintains that it will be operated exclusively for commercial purposes and is not established, financed, maintained or controlled by any candidate or political party committee, nor will it conduct any of its activities in coordination or at the request or suggestion of any candidate or party committee.

StandLouder.com plans to provide services, without regard to party affiliation, through its website that will enable users to submit proposed ads for posting on the website and to allow users to help finance the airings of those ads on television, radio or other media. StandLouder.com maintains that submissions of content for ads may concern any topic, and some ads will relate to social and political issues, including candidates for public office.

Creation of Content

StandLouder.com states that it will reserve the right to refuse to post ads if they contain offensive content or if they raise legal compliance issues such as defamation, intellectual property infringement or fraud, etc. Ads may not solicit contributions to any political committee or candidate, nor may they republish or redistribute candidate-created content. StandLouder.com will also ask persons or entities who submit ads to represent that they are not foreign nationals, federally chartered organizations, federal government contractors, candidates or political party committees. StandLouder.com will, however, require content creators to identify themselves to StandLouder.com and to provide information regarding the production costs of their advertisement submissions. This information will be included by StandLouder.com in reports filed with the Commission.

Funding Advertisements

StandLouder.com proposes to establish a two-stage process for collecting funds from users of its website who wish to finance an ad for distribution to television, radio or other media. When StandLouder.com posts an ad on its website, a user may pledge any amount to help finance its distribution, but will only be charged $1 initially on his or her credit card. When StandLouder.com receives enough pledges to indicate that an ad will be successfully funded, StandLouder.com will “open [the advertisement] for sponsorship.” At this second stage, funders who have pledged funds must take affirmative steps to pay the balance due on their pledge. Other users may also provide funds, which will be charged immediately to their accounts.

StandLouder.com will accept funds from individuals, partnerships, corporations, nonconnected committees and separate segregated funds (SSFs) to help finance advertisements. Once StandLouder.com has determined a particular “media strategy” for an ad, it will inform users of that strategy and purchase air time for, or otherwise distribute, the ad.

Analysis

The Commission could not approve a response by the required four votes on whether StandLouder.com is a political committee, or whether collectively StandLouder.com, the content creators and the users who donate funds will become a political committee or a series of political committees. Additionally, the Commission could not approve a response as to which disclosure and disclaimer obligations apply to StandLouder.com’s advertisements.

However, the Commission agreed that StandLouder.com could form an “independent expenditure-only committee” (IE-only committee) for the purpose of accepting advertisement content, receiving contributions and funding independent expenditures.

Nonconnected committees that make only independent expenditures may solicit and accept unlimited contributions from individuals, corporations and labor organizations and from other political committees, but not from foreign nationals, federal contractors, national banks or federally chartered corporations. See AO 2011-11. StandLouder.com asserts that its IE-only committee would register with the Commission as a nonconnected committee, would not make contributions or coordinated communications, and would comply with all reporting and disclaimer requirements provided in the Federal Election Campaign Act and Commission regulations. As such, the Commission concluded that StandLouder.com may establish and operate an IE-only committee.

(Posted 2/7/12; By: Myles Martin)

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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; Myles Martin, Editor