NPRM on electioneering communications

On August 31, 2007, the Commission published a Notice of Proposed Rulemaking (NPRM) in the Federal Register seeking public comment on proposed changes to Commission regulations regarding electioneering communications (ECs). The NPRM is in response to the Supreme Court's recent decision in FEC v. Wisconsin Right to Life, Inc. (WRTL II).

Background

The Bipartisan Campaign Reform Act of 2002 (BCRA) amended the Federal Election Campaign Act (the Act) to add a new type of political communication called "electioneering communications" (EC). The BCRA defined an EC as a broadcast, cable or satellite communication that refers to a clearly identified federal candidate, is publicly distributed within 30 days of a primary election or within 60 days of a general election and is targeted to the relevant electorate. 2 U.S.C. §434(f)(3)(A)(i) and 11 CFR 100.29(a). Corporations and labor organizations are prohibited from using their general treasury funds to finance ECs. 2 U.S.C. §441b(b)(2) and 11 CFR 114.2(b)(2)(iii).

In WRTL II, the Supreme Court reviewed an "as-applied" challenge to the EC funding prohibitions(1) where Wisconsin Right to Life, Inc. sought to use its own general treasury funds, which included donations it had received from other corporations, to pay for broadcast ads during the EC period that referred to both U.S. Senators from Wisconsin, one of whom was a clearly identified candidate for federal office in that election. The plaintiff argued that these communications were genuine issue ads run as part of a grassroots lobbying campaign on the issue of Senate filibusters of judicial nominations.

The Supreme Court held that because the ads in question were not the "functional equivalent of express advocacy," the prohibition on corporate or labor organization funding of ECs was unconstitutional as applied to the plaintiff's ads. The Supreme Court further held that a communication is the "functional equivalent of express advocacy" only if it "is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate."Proposed rules on electioneering communications

The FEC seeks comment on two proposed alternative methods of implementing the Supreme Court's WRTL II decision. Both alternatives would create an exemption that includes a general standard based on the "functional equivalent" test from the WRTL II decision, together with two safe harbor provisions for common types of communications.

Alternative 1. The first proposed alternative would create an exemption only from the prohibition on the use of corporate and labor organization funds to finance ECs in 11 CFR 114.2 and other similar provisions in part 114. The proposed revisions would not alter the definition of EC or the EC reporting requirements. Corporations and labor organizations would be required to file disclosure reports once they spend more than $10,000 in a calendar year on ECs.

Alternative 2. The second alternative proposal would amend 11 CFR 100.29 by adding a new section that would exempt certain types of communications that otherwise meet the current definition of EC. Accordingly, under this proposal, any communication that met the criteria for the exemption would not be considered an EC and therefore would not be subject to either the corporate and labor organization funding prohibitions for the EC disclosure requirements. This alternative would extend the exemption to individuals, Qualified Nonprofit Corporations (QNCs) and unincorporated entities.

Safe harbor for grassroots lobbying communications

Both proposed alternatives would establish identical safe harbors for grassroots lobbying communications based on the Supreme Court's determination that the ads considered in WRTL II were not the "functional equivalent of express advocacy" because the content of the communications was "consistent with that of a genuine issue ad" and the communications lacked "indicia of express advocacy." A communication would qualify for the proposed grassroots lobbying safe harbor only if it satisfies all four prongs in the proposed rule described below.

The first prong would be that the communication "exclusively discusses a pending legislative or executive matter or issue." The second prong would be that the communication "urges an officeholder to take a particular position or action with respect to the matter or issue, or urges the public to adopt a particular position and contact the officeholder with respect to the matter or issue." The third prong would be that the communication "does not mention any election, candidacy, political party, opposing candidate or voting by the general public." The final prong would be that communication "does not take a position on any candidate's or officeholder's character, qualifications or fitness for office."

The NPRM seeks public comment on numerous examples of communications under each of these proposed prongs of the safe harbor that illustrate the scope of the proposed exemption. The NPRM also seeks comment on the application of the proposed exemption and safe harbor to actual ads from past Commission experience.

Safe Harbor for Commercial and Business Ads. The Commission proposes to add an additional safe harbor provision for commercial and business ads that may otherwise meet the definition of electioneering communication, but may be reasonably interpreted as having a non-electoral, business or commercial purpose. Communications would qualify for this safe harbor provision by satisfying all four prongs described below.

The first prong of the proposed safe harbor would be that the communication "exclusively advertises a federal candidate or officeholder's business or professional practice or any other product or service." The second prong would be that the communication is "made in the ordinary course of business of the entity paying for the communication." The third and fourth prongs of the proposed safe harbor for commercial and business ads would be identical to the third and fourth prongs of the safe harbor for grassroots lobbying: 1) the ad does not mention any election, candidacy, political party, opposing candidate or voting by the general public, and 2) the ad does not take a position on any candidate or officeholder's character, qualifications or fitness for office.

The NPRM also seeks public comment as to examples of communications under this proposed safe harbor.

Reporting of Electioneering Communications. Any person that makes electioneering communications aggregating in excess of $10,000 in a calendar year must disclose the activity in a report filed with the Commission that includes the names and addresses of each donor who donated $1,000 or more in the aggregate during the period beginning on the first day of the preceding calendar year and ending on the disclosure date. 11 CFR 104.20(b)-(c). Commission regulations provide that persons making electioneering communications may create a segregated bank account containing only funds contributed by individuals who are U.S. citizens or nationals, or permanent residents. If a person does not create a segregated bank account and pays for electioneering communications from a general account, that person must disclose all donors of over $1,000 to that person during the current and preceding calendar year. 11 CFR 104.20(c)(7)-(8).

As part of Alternative 1, the Commission proposes to amend its rules on reporting and establishing segregated bank accounts for electioneering communications to accommodate reporting by corporations and labor organizations that choose to make electioneering communications that are permissible under proposed Alternative 1.

Comments and Hearing

The full text of this NPRM is available in the Federal Register (72 FR 50261) and is also posted on the FEC web site at http://sers.fec.gov/fosers/. All comments must be submitted in writing to Mr. Ron B. Katwan, Assistant General Counsel, and must be submitted by e-mail, fax or paper copy form. E-mailed submissions must be sent to wrtl.ads@fec.gov, and faxed submissions must be sent to (202) 219-3923. If e-mailed comments include an attachment, the attachment must be in either Adobe Acrobat (.pdf) or Microsoft Word (.doc) format. All comments (including those submitted via e-mail) must include the full name and postal service address of the commenter or they will not be considered. All written comments must be submitted on or before October 1, 2007.

The Commission will hold a public hearing on the proposed rules at 10:00 a.m. on October 17, 2007, at the FEC's headquarters, located at 999 E Street NW, Washington, D.C. 20463. Anyone seeking to testify at the hearing must file written comments by the due date and must include a request to testify in their written comments.

1) In McConnell v. FEC, the Supreme Court held that BCRA’s prohibition on corporate or labor organization funding of electioneering communications was not facially overbroad. However, in FEC v. Wisconsin Right to Life I (WRTL I), the Court held that McConnell did not preclude further "as applied" challenges to the corporate and labor organization funding prohibitions.