The Internet, The First Amendment, and Campaign Finance Regulation
Free Speech & Election Law Practice Group Newsletter - Volume 3, Issue 1, Spring 1999
July 1, 1999David M. Mason, John K. Abegg
One of the major challenges for the Federal Election Commission (FEC) today is determining how to treat the Internet for purposes of the Federal Election Campaign Act (FECA). The Internet is increasingly significant in American public affairs. Individuals and organizations use the Internet to discuss politics and pursue political aims. Campaigns and political committees are treating the Internet as a significant factor in their campaign plans and activities.
At the same time, the Internet presents First Amendment questions in a new and beneficial light one that is especially interesting when compared with broadcast communications. The practical dominance of broadcast communication in political campaigns has led to some extremely negative consequences for the First Amendment status of political activity. Broadcast media are characterized legally, and to some degree practically, by scarcity. The fact that broadcast licenses, and therefore broadcast time, is quite limited is a far greater factor in regulation of the medium than the public nature of the broadcast spectrum. With scarcity comes high prices, and a resulting over-focus on the cost of political campaigns, and a confusing admixture of spending and speech questions.
The Internet, on the other hand, has a basis of plenitude. There is literally no restriction on who can have an Internet site or on how many different sites there are. What is most salient about the Internet for First Amendment purposes is not whether 60 or 80 percent of the public has access, but interactivity. Anyone who is on the Internet can have something to say, and the financial and technical barriers to hosting a home page with substantial content are quite low. In the age of the Internet, everyone of even modest means can own a printing press.
Because the Federal Election Campaign Act was passed and amended well before the era of widespread public use of the Internet, the application of the FECA's definitions and concepts (which generally contemplate dissemination of information through broadcasting or print media) to the Internet is not always straightforward.
For purposes of the First Amendment, and the FECA's media exemption, for example, there is a real question of how extensively press freedoms should apply to the Internet. (The FECA's media exemption applies to any "periodical publication," unless controlled by a candidate or political committee.) Newspapers from the early Federal period the period marked by passage of the First Amendment were partisan, contentious and irresponsible. They are thus more like the Drudge Report or "HillaryNo.Com" than they are the New York Times or NBC. It is not clear why, then, the FECA's media exemption would apply any less to a regularly-updated personal homepage on the Internet as to ABCNews.com or the online Slate magazine.
In addition, the combination of open access and relatively low cost threatens to undermine the rationale behind the campaign finance regime. Just as Internet stock valuations appear untethered to underlying finances, the value of political communications on the Internet is driven more by innovation and presentation that is to say by ideas than by placement and spending. When the political impact of a site appears to far exceed its dollar cost, or when marginal costs are extremely low, it is difficult to apply a regulatory regime founded upon limits on finances, intended, we must remember, only to prevent financial corruption.
The Commission has addressed federal campaign activities on the Internet largely on an ad hoc basis through the enforcement process or in response to advisory opinion (AO) requests. (Proposed legislation in Congress would specifically apply the FECA to some Internet communications; see, for instance, Section 201(b) of H.R. 417, the "Shays-Meehan" bill, addressing voter guides posted on the Internet.) While the Commission may have enunciated certain principles in resolving these particular matters, it has not always been evident how or whether the principles cited in particular factual situations can be applied more broadly. In addition, there has been limited opportunity for public notice and comment in the advisory opinion process, and none in the enforcement process. The result has been an unappetizing stew, made up of whatever ingredients were on the shelf at the time.1
Most recently, in AO 1999-9, the Commission ruled that the Bill Bradley for President Committee could solicit credit card contributions over the Internet for Presidential Primary Matching Fund purposes. The FEC had previously ruled that contributions otherwise permissible under the FECA could be solicited through the Internet. See AOs 1995-35 (Alexander for President) and 1995-9 (NewtWatch PAC). The Commission concluded that the Bradley Campaign's privacy, verification, and record-keeping safeguards allowed it to use the Internet in obtaining primary matching funds. (Because the FEC's then-existing regulations proscribed credit card contributions for matching fund purposes, a new regulation was required in order to approve the request.)
Also recently, the State of Minnesota, in AO 1999-7, asked the Commission whether the FECA regulated the placement on Minnesota's general candidate information web site of free hyperlinks to candidates' campaign web sites. The FEC concluded that even if Minnesota's web site otherwise fell within the FECA (by being "for the purpose of influencing an election to Federal office"), the FECA's exemption for nonpartisan voter drive activity applied to the site; Minnesota's addition to its web site of hyperlinkswhich are simply cyber addressesdid not change this analysis.
In AO 1999-3, the Commission ruled that Microsoft PAC could use electronic mail to obtain payroll deductions for employee contributions. The FEC approved the PAC's use of unique electronic identification as satisfying the agency's requirement of signed approval by employees to authorize such deductions.
Last year, the Commission, in AO 1998-22 (Leo Smith), concluded that an individual's web cite that contained express advocacy was "something of value" under the FECA. As a result, the agency ruled that the costs associated with the site's creation and maintenance were "expenditures" under the FECA and FEC regulations, and that the site had to contain a disclaimer that included the name of the its sponsor and whether a candidate had authorized it.
In AO 1997-16 (Oregon Natural Resources Council Action PAC), the agency determined that if a PAC wanted to set up a web site containing the PAC's endorsements, but that would be funded by the PAC's supporting corporation, the site could not be available to the general public. The Commission reasoned that the corporate funding of the site rendered the web site activity corporate activity; as a result, the Committee would have to restrict access to the site to members of its restricted class by using a password or similar device.
In AO 1996-2, the FEC ruled that CompuServe could not offer to federal candidates free member accounts on its on-line information service without running afoul of the FECA's prohibition on (in this case, in-kind) corporate contributions. (The agency concluded that neither CompuServe nor its Online services qualified for the FECA's media exemption.)
In AO 1995-9 (NewtWatch), the Commission concluded that a PAC's use of its web site to distribute information about then-Speaker Gingrich and to solicit contributions triggered the FECA's disclaimer requirement as "general public political advertising." The agency further ruled that the PAC could solicit contributions over the Internet if the PAC complied with the FECA's record keeping and reporting requirements; it also approved the PAC's proposal to provide potential contributors with unusually extensive information about federal election law and to ask them to indicate affirmatively that they understood these requirements.
Lastly, in "Matter Under Review" (the name given to FEC enforcement actions at the agency level) 4340 and 4685 (Tweezerman), the Commission concluded that a corporation and a federal campaign violated the FECA by not including disclaimers on their respective web sites. The agency also concluded that the corporation and the campaign, respectively, had violated the FECA's ban on making and receiving (also in this case, in-kind) corporate contributions because the corporation had linked its web site to a candidate's web site, and the campaign did not compensate the corporation for this link (which had some value).
While each of these decisions may be defensible, they have generally applied preexisting regulatory categories (such as "general public political advertising" or "periodical publication") in an Internet contexta context which the FECA and FEC regulations do not contemplate. A more comprehensive consideration of political activity on the Internet, and the threat, if any, of corruption therefrom, may produce different, and hopefully less onerous, regulatory results.
To this end, the Commission recently instructed its staff to draw up a regulatory Notice of Inquiry to determine how the FECA and FEC regulations should be applied to (and whether these regulations should be altered regarding) the use of the Internet in federal election campaigns. By soliciting comments, the Commission is not suggesting that any Internet-specific regulation be adopted, nor necessarily that any existing regulation be changed. However, it may be the case that the Commission should alter its regulations, including regulatory exemptions, in light of certain features of the Internet.
In addition to soliciting comments broadly on how to apply the FECA to the Internet and how to alter or interpret FEC regulations in light of the Internet's widespread use, the Notice of Inquiry will provide an opportunity to comment on the FEC's previous ad hoc decisions involving the Internet and on specific questions which have already become evident, including:
- Application of the media exemption: does it apply to Internet "magazines"; can (some) Internet sites be considered "periodical publications"; would "list serves" or regular e-mails (especially those requested by recipients) qualify as periodical publications; was the Commission's conclusion (in AO 1996-2) that an Internet Service Provider's proposed provision of free accounts to federal campaigns would be a contribution to those campaigns correct?
- The Internet as communication to the public: the Commission has generally concluded that posting of information on the Internet constitutes communication with the general public unless access to the information is restricted by a password or similar method. Is this conclusion correct, or are (some) Internet postings more akin to the provision of information only upon request?
- Internet press releases: the Commission permits organizations which are otherwise prohibited from participating in campaigns to announce endorsements as long as certain restrictions are observed. May an organization which routinely posts press releases on the Internet include press releases announcing endorsements as long as endorsement releases receive no special prominence or treatment?
- How should political committees report Internet expenditures? Multi-candidate committees may host web sites which include candidate-specific materials. Should the multi-candidate committee be required to calculate the value of information about a specific candidate to be reported as a contribution?
- Should "hyperlinks" to candidate or political committee Internet sites be treated as campaign expenditures in and of themselves, or are such links simply the equivalent of mailing addresses or phone numbers?
- How should the Commission address the re-publication of content (such as speeches or position papers) from a candidate's Internet site? Some presidential campaigns permit visitors to their Internet sites to download "banners" which include a campaign ad and a link to the campaign site. Should the Commission regulate the placement of banners ("electronic bumper stickers") on non-campaign web sites? Since the marginal cost of adding such a banner to a web site is near zero, what is its value for FECA purposes?
- How broadly should the Commission treat e-mail as a substitute for regular mail: would an e-mail follow-up to a contribution which arrived in the regular mail satisfy "best efforts" for donor identification?
- How should Internet-based organizations be treated for purposes of the FEC's membership rules?
- Should hosts of Internet discussion sites be held liable for postings (for instance, express advocacy) by persons participating in the discussion?
The Governor George W. Bush for President Exploratory Committee, Inc., recently requested the Commission to issue an advisory opinion on various uses of the Internet in the campaign context, and a campaign's responsibilities under the FECA, the Presidential Primary Matching Payment Act, and FEC regulations with respect to such uses. Areas into which the Bush Committee inquired were: valuation of web sites and electronic mail, third-party (vendor) selling of campaign materials over the Internet, and political polling on the Internet. The Commission is due to respond by early August.
Unless the FECA's media exemption is applied broadly to the Internet, a large amount of political activity currently being carried out on the Internet arguably falls within the FEC's jurisdiction. Internet users are largely unaware of the threat of FEC regulation due to their assumptions regarding free speech protections, and because direct costswhich could trigger application of the FECAare quite low. The FEC's Notice of Inquiry on the Internet should both remind Internet users that their political speech is potentially subject to regulation and provide them with an opportunity to shape how the FEC will apply the law to this still-developing medium.
* This article does not represent the views of the Federal Election Commission. It states only the views of the individual authors. Mr. Mason currently serves as a Commissioner of the Federal Election Commission. Mr. Abegg is Commissioner Mason's Executive Assistant.
- For a fuller discussion of the following matters and additional summaries of FEC advisory opinions in an Internet context, see "FEC Regulation of the Internet," by Trevor Potter, at The Brookings Institute's web site discussing "Recent Developments in Campaign Finance Regulation".