[Federal Register Volume 64, Number 214 (Friday, November 5, 1999)]
[Proposed Rules]
[Pages 60360-60368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28982]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 64, No. 214 / Friday, November 5, 1999 /
Proposed Rules
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FEDERAL ELECTION COMMISSION
11 CFR Parts 100, 102, 103, 104, 106, 107, 109, 110, 114, and 116
[Notice 1999--24]
Use of the Internet for Campaign Activity
AGENCY: Federal Election Commission.
ACTION: Notice of inquiry and request for comments.
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SUMMARY: The Commission is currently examining the issues raised by the
use of the Internet to conduct campaign activity. The Commission is
conducting this review in order to assess the applicability of the
Federal Election Campaign Act and the Commission's current regulations
to campaign activity conducted using this medium. In order to assist in
its review, the Commission invites comments on the application of the
Act and the current regulations to Internet campaign activity. The
Commission will use the comments received to determine whether or not
to issue a Notice of Proposed Rulemaking (``NPRM''), which may include
proposed changes to its regulations. An NPRM would seek further comment
on any proposed revisions to the Commission's rules. The Commission has
made no final decisions regarding the issues discussed in this notice,
and may ultimately decide to take no action. Further information is
provided in the supplementary information that follows.
DATES: Comments must be submitted on or before January 4, 2000.
ADDRESSES: All comments should be addressed to Rosemary C. Smith,
Acting Assistant General Counsel, and must be submitted in either
written or electronic form. Written comments should be sent to the
Federal Election Commission, 999 E Street, N.W., Washington, DC 20463.
Faxed comments should be sent to (202) 219-3923, with printed copy
follow up. Electronic mail comments should be sent to
internetnoi@fec.gov, and should include the full name, electronic mail
address and postal service address of the commenter. Additional
information on electronic submission is provided below.
FOR FURTHER INFORMATION CONTACT: Rosemary C. Smith, Acting Assistant
General Counsel, or Paul Sanford, Staff Attorney, 999 E Street, N.W.,
Washington, D.C. 20463, (202) 694-1650 or (800) 424-9530.
SUPPLEMENTARY INFORMATION: In recent years, there has been a dramatic
increase in the use of the Internet to conduct campaign activity
related to federal elections. Candidates, parties and political action
committees (``PACs'') have apparently concluded that the Internet is a
powerful campaign tool with the potential to significantly influence
the outcome of federal elections. Individuals and other organizations
have also used the Internet to participate directly in election
campaigns, taking advantage of the medium's capacity to reach large
numbers of people at very little cost.
The dramatic increase in campaign activity conducted on the
Internet raises a number of issues regarding the applicability of the
Federal Election Campaign Act of 1971, as amended, 2 U.S.C. 431 et seq.
(``FECA'' or ``the Act''). The Act requires candidates, parties and
PACs to file disclosure reports regarding their election-related
activity, and also imposes restrictions and limitations on the amounts
that may be contributed to candidates, parties and PACs by individuals,
corporations, labor organizations and other committees.
Although the FECA was enacted long before widespread use of the
Internet, and has, in some instances, been narrowed by court decisions,
see e.g., Buckley v. Valeo, 424 U.S. 1 (1976), FEC v. Massachusetts
Citizens for Life, 479 U.S. 238 (1986), it remains broad enough to
potentially encompass some election-related activity conducted on the
Internet. For example, section 431(8) states that the term
``contribution'' includes ``any gift, subscription, loan, advance or
deposit of money or anything of value made by any person for the
purpose of influencing any election for Federal office.'' 2 U.S.C.
431(8)(A)(i), 11 CFR 100.7(a)(1). The Commission has historically
interpreted the phrase ``anything of value'' in section 431(8)(A)(i) to
include in-kind contributions, i.e., the provision of goods or services
without charge or at less than the usual or normal charge. 11 CFR
100.7(a)(1)(iii). The term ``contribution'' also includes ``the payment
by any person of compensation for the personal services of another
person which are rendered to a political committee without charge for
any purpose.'' 2 U.S.C. 431(8)(A)(ii), 11 CFR 100.7(a)(3).
Similarly, section 431(9) states that the term ``expenditure''
includes ``any purchase, payment, distribution, loan, advance, deposit,
or gift of money or anything of value, made by any person for the
purpose of influencing any election for Federal office.'' 2 U.S.C.
431(9)(A), 11 CFR 100.8(a). In-kind contributions are also
expenditures. 11 CFR 100.8(a)(1)(iv).
Section 441b of the Act generally prohibits contributions and
expenditures by corporations and labor organizations, and states that,
for the purposes of this prohibition, the term ``contribution or
expenditure'' includes any direct or indirect payment, distribution,
loan, advance, deposit, or gift of money, or any services, or anything
of value (except a loan of money by a national or State bank made in
accordance with the applicable banking laws and regulations and in the
ordinary course of business) to any candidate, campaign committee, or
political party in connection with any election to any federal office.
Id.
Thus, the Act, and in particular, the contribution and expenditure
definitions, are at least facially applicable to a wide range of
activity, including some activity that could be conducted on the
Internet. However, the Act also contains a number of exemptions from
the contribution and expenditure definitions. For example, the value of
services provided without compensation by any individual who volunteers
on behalf of a candidate or political committee is not a contribution.
2 U.S.C. 431(8)(B)(i). The Act also excludes costs incurred by state
and local party committees for (1) slate cards and sample ballots, (2)
campaign materials (such as pins, bumper stickers, brochures, yard
signs, etc.) used in connection with volunteer activities, and (3)
voter registration and get-out-the-vote activities on behalf of
Presidential and Vice Presidential nominees, under certain
circumstances. 2 U.S.C. 431(8)(B)(v), (x), (xii), (9)(B)(iv), (viii),
(ix).
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News stories, commentaries and editorials distributed by a
broadcasting station, newspaper, magazine or other periodical
publication are not expenditures, unless the broadcaster or publisher
is owned or controlled by a candidate, political committee or political
party. 2 U.S.C. 431(9)(B)(i). In addition, communications on any
subject between a corporation and its stockholders, executive and
administrative personnel, and their families, and between a labor
organization, its members and their families, are not expenditures
under the Act. 2 U.S.C. 441b(b)(2)(A). Costs incurred by publicly
funded Presidential primary candidates ``in connection with the
solicitation of contributions'' are also exempt from the expenditure
definition. 2 U.S.C. 431(9)(B)(vi).
Although there are no minimum dollar thresholds for something of
value to be considered a contribution or expenditure, the Act excludes
activity that falls below certain dollar thresholds from some of the
reporting requirements. For example, individuals that make independent
expenditures are not required to submit disclosure reports unless their
expenditures aggregate in excess of $250 during a calendar year. 2
U.S.C. 434(c). Similarly, organizations are not required to register
and report as political committees until their contributions or
expenditures aggregate in excess of $1000 in a calendar year. 2 U.S.C.
Sec. 431(4). Political committees are only required to provide the
identification (name, mailing address, occupation, name of employer, 2
U.S.C. 431(13)) of those contributors whose contributions aggregate in
excess of $200 in a calendar year. 2 U.S.C. 434(b)(3)(A).
As the agency responsible for administering the Federal Election
Campaign Act, the Federal Election Commission (``FEC'' or
``Commission''), must determine the extent to which the Act applies to
campaign activity conducted on the Internet. In an effort to begin the
process of making this determination, the Commission requests comments
on the application of the Act and the Commission's current regulations
to Internet campaign activity.
One threshold question upon which the Commission invites comments
is whether campaign activity conducted on the Internet should be
subject to the Act and the Commission's regulations at all. Are
Internet campaign activities analogous to campaign activities conducted
in other contexts, or do they differ to such a degree as to require
different rules?
In addition, commenters are encouraged to discuss aspects of the
Commission's current regulations that may affect or inhibit the use of
the Internet in ways that may not have been anticipated or intended
when the regulations were promulgated, and which may now be
inappropriate when applied to Internet activity. Commenters are also
encouraged to identify and discuss provisions of the FECA or the
regulations the application of which is unclear in the context of
political activity conducted on the Internet.
Several significant issues relating to the use of the Internet are
discussed in detail below. Comments are also welcome on any other
Internet-related issues that should be addressed in the regulations.
Internet Activities as Contributions or Expenditures
1. Introduction
The threshold question raised when the Internet is used for
activity relating to federal candidates and elections is whether that
activity should be treated as a contribution or an expenditure under
the Act. If so, under what circumstances? The contribution and
expenditure definitions are summarized above. The Commission invites
general comments on the application of these definitions to candidate
and election-related activity conducted on the Internet. The Commission
is also interested in comments on the issues raised by these
definitions in the particular situations described below.
2. Candidate Web Sites
Increasing numbers of candidates are establishing web sites to
support their campaigns. The most basic question raised is how the
candidate's committee should treat costs associated with establishing a
campaign web site. Are these costs expenditures under the Act? Or,
should they be treated as some other type of committee disbursement?
The Commission is also interested in comments on several specific
issues that arise in relation to hyperlinks on candidate web sites. A
hyperlink is an electronic link to another web site. If a candidate's
site contains a hyperlink to the site of another candidate or a
political party, should that link be treated as a contribution from the
candidate who operates the originating site to the linked candidate or
party committee? If so, how should the value of that contribution be
determined? When does that contribution occur? If the link remains on
the site for an extended period, does the contribution occur in each
reporting period during which it remains on the site? When should it be
reported? (Reporting issues will be discussed more extensively below.)
What if the candidate's web site contains a link to the site of a
vendor that sells items such as pins, T-shirts, bumper stickers, etc.,
that express support for the candidate? In this situation, the link
serves as a form of advertising for the vendor. Are there circumstances
under which this would raise issues under the FECA? What if the vendor
is a corporation, and is paying the campaign to provide the link? Would
this payment be a contribution, or should the committee treat it as a
permissible ``other receipt?'' Is it a contribution only if the vendor
pays more than the usual and normal charge for the link?
3. Web Sites of Publicly Funded Candidates
The Commission invites comments on whether there are special
considerations involving web sites established by Presidential
candidates who accept public funding under the Presidential Election
Campaign Fund Act, 26 U.S.C. 9001 et seq., or the Presidential Primary
Matching Payment Account Act, 26 U.S.C. 9031 et seq. What issues arise
when publicly funded Presidential candidates use the Internet to
promote their candidacies?
For example, the Commission recently reversed a long-standing
policy to allow for matching of credit card contributions received by
Presidential primary candidates via the Internet. 64 FR 32,394 (June
17, 1999). This raises an issue regarding solicitation costs incurred
by publicly funded candidates.
Under 2 U.S.C. 431(9)(B)(vi) and 11 CFR 100.8(b)(21), costs
incurred by publicly funded Presidential primary candidates ``in
connection with the solicitation of contributions'' are not
expenditures under the Act. Similarly, solicitation costs incurred by
publicly funded general election candidates are not expenditures if
contributions are being solicited to make up for deficiencies in
amounts received from Presidential Election Campaign Fund. Id. As a
result, these costs do not count toward the expenditure limits set out
in section 441a(b). See 2 U.S.C. 431(9)(B)(vi), 26 U.S.C. 9003(b)(1),
9033(b)(1). If a publicly funded candidate uses its web site to solicit
contributions, should a portion of the cost of establishing and
maintaining the site be exempt from the definition of expenditure under
this provision? If so, how should the exempt amount be determined?
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The Commission invites comments on this issue and any other issues
raised by the use of the Internet by publicly funded candidates.
4. Web sites created by individuals
a. Text and other materials
Many web sites created by individuals contain references to
candidates and political parties. Some sites, often referred to as
``fan sites,'' are devoted entirely to urging support for or opposition
to one or more candidates. In other situations, only a portion of an
individual's web site might be devoted to candidate advocacy.
The FECA distinguishes between activities conducted by individuals
in cooperation or consultation with a candidate, and activities
undertaken independently of a candidate. Generally, if an individual
conducts campaign activity in cooperation or consultation with a
candidate, the cost of that activity is an in-kind contribution. 2
U.S.C. 431(8)(A)(ii), 431(17). An individual may make no more than
$1000 in contributions to a candidate per election. 2 U.S.C.
441a(a)(1)(A). In addition, the receipt of in-kind contributions must
be reported by the candidate. 2 U.S.C. 434(b), 11 CFR 104.3(a)(4)(i).
In contrast, if an individual conducts activity ``without
cooperation or consultation with any candidate, or any authorized
committee or agent of such candidate, and which is not made in concert
with, or at the request or suggestion of, any candidate, or any
authorized committee or agent of such candidate,'' that activity is not
a contribution. However, if the activity expressly advocates the
election or defeat of a candidate, the expenses incurred in that
activity are an independent expenditure. 2 U.S.C. 431(17). Although
individuals may make unlimited independent expenditures on behalf of a
candidate, ``every person (other than a political committee) who makes
independent expenditures in an aggregate amount or value in excess of
$250 during a calendar year'' must file disclosure reports. 2 U.S.C.
434(c).
How should these definitions be applied to web sites created by
individuals that contain references to candidates or political parties?
Are costs incurred by individuals in posting materials relating to
candidates or parties covered by the FECA? If so, how should the value
of the individual's contribution or independent expenditure be
determined? What costs should be taken into account? Should the
individual posting the materials be required to treat a portion of the
initial cost of the computer hardware used to operate the web site as
part of the contribution or expenditure? Should the individual be
required to treat any other expenses, such as the costs of software
purchased to create the site and fees paid to maintain it, as a
contribution or expenditure?
What if the site contains both candidate or party-related materials
and other unrelated materials? Should a portion of the costs of the
site be treated as a contribution or expenditure? What if an individual
who already owns a computer and already has access to the Internet
posts candidate or party-related materials on the Internet? An
individual in this situation may incur little or no additional cost in
posting these materials. Does this mean that no contribution or
expenditure has occurred?
With regard to the issue of whether an individual's Internet
activities should be treated as an in-kind contribution or independent
expenditure, 2 U.S.C. 431(17) states that ``[t]he term `independent
expenditure' means an expenditure by a person expressly advocating the
election or defeat of a clearly identified candidate which is made
without cooperation or consultation with any candidate, or any
authorized committee or agent of such candidate, and which is not made
in concert with, or at the request or suggestion of, any candidate, or
any authorized committee or agent of such candidate.'' What types of
contacts between an individual and a candidate should be regarded as
``cooperation or consultation,'' often referred to as ``coordination,''
with the candidate within the meaning of this section? Should the types
of contact considered coordination with a candidate be different for
Internet activities than for activities that take place in other
contexts? The Commission is currently engaged in a rulemaking on the
issue of coordination with a candidate, and has published two Notices
of Proposed Rulemaking seeking comments on this issue. 63 FR 69,523
(Dec. 16, 1998), 62 FR 24,367 (May 5, 1997). Two recent court decisions
also discussed the concept of coordination. Federal Election Commission
v. Christian Coalition, 52 F. Supp. 2d (D.D.C. 1999), Federal Election
Commission v. Public Citizen, 1999 WL 731056 (N.D.Ga. 1999). See also,
Clifton v. Federal Election Commission, 114 F.3d 1309 (1st Cir. 1997)
cert. denied 118 S. Ct. 1036 (1998), Colorado Republican Federal
Campaign Committee v. FEC, 518 U.S. 604 (1996). Comments are invited on
how coordination should be defined in the context of campaign activity
conducted on the Internet.
How should the regulations address the republication of candidate-
generated materials on web sites created by individuals? For example, a
visitor to a candidate's web site might download files known as
``banners'' that can be posted like electronic bumper stickers on the
visitor's own site. In other cases, a visitor might download textual
materials, such as speeches or position papers, and make these
materials available on his or her own site. Ordinarily, the
republication of campaign materials prepared by the candidate would be
an in-kind contribution. 2 U.S.C. 441a(a)(7)(B), 11 CFR 109.1(d)(1).
Should this rule apply to republication of materials on the Internet?
If so, how should the in-kind contribution be valued for FECA purposes?
Or, should the Commission create an exception to this rule for the
republication of materials on the Internet, since the marginal cost to
the individual of adding a banner or other downloaded material to his
or her web site is near zero?
If an individual posts candidate-related materials on the Internet
without cooperation or consultation with the candidate, the question
raised is whether the candidate-related content should be treated as an
independent expenditure. Generally, a communication must contain
express advocacy in order to be an independent expenditure. 2 U.S.C.
431(17). How should this test be applied to the contents of a web site?
Should the test be applied to the site as a whole, or should it be
applied separately to different areas of the site?
b. Hyperlinks
Some web sites created by individuals contain hyperlinks to a
candidate's site or to the site of another political committee. Under
what circumstances should posting a hyperlink be treated as a
contribution or independent expenditure?
A hyperlink on an individual's web site may have value to the
linked candidate, since the link will inevitably steer visitors from
the individual's site to the candidate's site. If the individual has
been in contact with the campaign and has agreed to provide the link at
no charge or less than the usual and normal charge, the link could be
regarded as an in-kind contribution. On the other hand, the costs of
providing the link are often negligible or nonexistent. In addition,
the practice in some areas of the Internet industry may be to place no
value on these links. Thus, the usual and normal charge for providing a
link may be zero.
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How widespread is the practice of providing free links? Should the
result be that no contribution or expenditure occurs when an individual
posts a hyperlink to a candidate or party web site?
If the individual that posts the link does so without any
consultation or coordination with the linked candidate's campaign, the
link would not be a contribution to the candidate's campaign. In these
circumstances, the issue is whether the link should be treated as an
independent expenditure. Generally, a communication must contain
express advocacy in order to be an independent expenditure. 2 U.S.C.
431(17). Should the express advocacy test be applied to the text of the
hyperlink itself, or to the contents of the candidate's site? Would a
hyperlink that appears as ``JonesMiller2000'' be express advocacy? What
if the text of the hyperlink does not constitute express advocacy, but
the linked site contains express advocacy?
Assuming that the text of the link contains express advocacy, how
should the value of the independent expenditure be determined? As
explained above regarding possible contributions, the owner of the site
may incur little or no additional cost in posting the link. Thus,
although the link might fall within the definition of ``independent
expenditure,'' it may fall below the $250 reporting threshold in 2
U.S.C. 434(c). Should the fact that the cost of the link is incremental
relieve the individual of his or her reporting obligation?
c. Web Sites Created by Campaign Volunteers
The Commission invites comments on the extent to which Internet
services provided by volunteers should be covered by the volunteer
exemption in section 431(8)(B)(ii) of the Act. Section 431(8)(B)(ii)
exempts ``the use of real or personal property * * * voluntarily
provided by an individual to any candidate or any political committee
of a political party in rendering voluntary personal services on the
individual's residential premises.'' Are Internet services covered by
this section?
d. Disclaimers
Section 441d of the FECA states that ``[w]henever any person makes
an expenditure for the purpose of financing communications expressly
advocating the election or defeat of a clearly identified candidate, or
solicits any contribution through any broadcasting station, newspaper,
magazine, outdoor advertising facility, direct mailing, or any other
type of general public political advertising,'' the communication must
contain a disclaimer statement. See also 11 CFR 110.11. Generally, this
statement must indicate who paid for the advertisement and whether it
was authorized by a candidate or candidate's committee. If so, the
candidate or committee must also be identified.
In Advisory Opinion 1998-22, an independent voter sought guidance
on the application of the disclaimer requirement to a web site that
urged the election of a candidate and the defeat of that candidate's
opponent. The Commission noted its conclusion in previous advisory
opinions that, because of the Internet's general availability, a web
site would be considered general public political advertising. Since
the site expressly advocated the election and defeat of candidates, it
was an independent expenditure that required a disclaimer under section
441d. See also Advisory Opinions 1995-9 and 1995-35.
The Commission is interested in comments on the conclusion reached
in Advisory Opinion 1998-22, and on the application of the disclaimer
requirement to the Internet. Should web sites created and maintained by
individuals be considered general public political advertising within
the meaning of section 441d? Internet users generally have to take the
affirmative step of directing their browsers to a web site in order to
view the contents of that site. In contrast, individuals are often
exposed to broadcast messages, newspaper advertisements and direct mail
involuntarily, without any deliberate action on their part. Should web
sites be treated differently than newspapers and broadcast stations for
this reason? The Commission invites comments on this issue.
5. Nonconnected Committees and Other Unincorporated Organizations
Since nonconnected political committees (other than multicandidate
committees) and other unincorporated organizations are treated the same
as individuals under the FECA, many of the same issues arise when these
entities use the Internet for candidate-related activity. The
Commission invites commenters to discuss the issues raised above as
they apply to these entities.
The Commission is also interested in comments on the circumstances
under which the inclusion of a hyperlink on the web site of a
nonconnected committee or other unincorporated organization should be
treated as ``nonpartisan activity designed to encourage individuals to
vote or to register to vote'' under section 431(9)(B)(ii). In Advisory
Opinion 1999-7, the Commission responded to a inquiry from a state
government agency that posted hyperlinks to candidates on its web site.
The Commission concluded that providing information about all ballot-
qualified candidates in a nonpartisan manner without first attempting
to determine recipients' candidate or party preferences falls within
section 431(9)(B)(ii) and 11 CFR 100.8(b)(3). Section 100.8(b)(3)
states that ``[a]ny cost incurred for activity designed to encourage
individuals to register to vote or to vote is not an expenditure if no
effort is or has been made to determine the party or candidate
preference of individuals before encouraging them to register to vote
or to vote.''
Should the Commission revise the regulations to specifically
exclude hyperlinks posted in this manner from the definition of
``expenditure?'' In its opinion, the Commission noted that the state
agency's site already included candidate mailing addresses and
telephone numbers, and concluded that ``[t]he addition of campaign web
addresses in the form of hyperlinks does not change this analysis.''
Should hyperlinks be treated as the equivalent of campaign mailing
addresses in all circumstances?
Commenters are also welcome to raise any other issues relating to
the use of the Internet by nonconnected committees and other
unincorporated organizations.
6. Corporations and Labor Organizations
a. Communications
Many corporations and labor organizations operate web sites to
communicate with the general public. Section 441b of the Act prohibits
corporations and labor organizations from making contributions or
expenditures in connection with federal elections. Thus, the Act
generally prohibits these entities from using their web sites to assist
or advocate on behalf of any federal candidate.
The question raised is under what circumstances should a candidate
or election-related communication on a corporate or labor organization
be treated as a prohibited contribution or independent expenditure? If
the election-related communication is in the form of a hyperlink to the
web site of a candidate or party committee, the issues that arise are
similar to those discussed in section 4(b), above, regarding hyperlinks
posted on an individual's web site. The Commission invites comments on
these issues, as
[[Page 60364]]
they arise in the context of web sites operated by corporations and
labor organizations.
The FECA also contains a number of exceptions from the contribution
and expenditure definitions that enable a corporation or labor
organization to engage in certain election-related activity without
violating the Act. For example, the Act exempts ``communications by a
corporation to its stockholders and executive or administrative
personnel and their families or by a labor organization to its members
and their families on any subject.'' 2 U.S.C. 441b(b)(2)(A). The
Commission's regulations refer to these groups as the ``restricted
class'' of a corporation or labor organization. 11 CFR 114.1(j).
Section 114.4(c) of the regulations also contains a series of
exceptions that allow corporations and labor organizations to
distribute certain candidate and election-related materials to the
general public without violating section 441b. Under this section, a
corporation or labor organization may make registration and get-out-the
vote communications to the general public, provided that: (1) They do
not expressly advocate the election or defeat of any clearly identified
candidate or candidates of a clearly identified political party, and
(2) they do not coordinate their efforts with any candidate or
political party. 11 CFR 114.4(c)(2). Similarly, a corporation or labor
organization may also distribute officially-produced registration or
voting information, official registration-by-mail forms, and absentee
ballots, provided the corporation or labor organization does not
expressly advocate, does not coordinate, and does not encourage
registration with any particular political party. 11 CFR 114.4(c)(3).
A corporation or labor organization may also prepare and distribute
the voting records of Members of Congress, provided that the voting
record and all communications distributed with it do not expressly
advocate, and that decisions on content and distribution of the record
are not coordinated with any candidate, group of candidates or
political party. 11 CFR 114.4(c)(4). But see Clifton v. Federal
Election Commission, 114 F.3d 1309 (1st Cir. 1997) cert. denied 118 S.
Ct. 1036 (1998). A corporation or labor organization may also prepare
and distribute voter guides consisting of two or more candidates'
positions on campaign issues under certain conditions set out in the
section 114.4(c)(5). Finally, the rules allow a corporation or labor
organization to endorse a candidate and announce the endorsement to the
general public through a press release and press conference, so long as
the press release and notice of the press conference are distributed
only to the representatives of the news media that the corporation or
labor organization customarily contacts when issuing nonpolitical press
releases or holding press conferences for other purposes. 11 CFR
114.4(c)(6).
The Commission invites comments on the issues raised by corporate
and labor organization use of the Internet for communication of
candidate and election-related information. One threshold issue is
whether, and under what circumstances, communication via the Internet
should be regarded as communication to the general public, and when it
should be treated as communication to a more limited audience. Advisory
Opinion 1997-16 involved, inter alia, a corporate endorsement posted on
the corporation's web site. The Commission concluded that communication
of the endorsement via the web site would, in effect, be communication
with the general public for purposes of section 441b, unless access was
limited to members of the restricted class using a password or similar
method. Should the Commission incorporate this interpretation into the
regulations? Under what circumstances should the Commission treat
information posted on a web site as communication to the restricted
class? Under what circumstances should it be treated as distribution to
the general public?
If the web site is treated as communication to the general public,
under what circumstances should a candidate or election-related
communication on a corporate or labor organization web site be treated
as a prohibited contribution or independent expenditure? If the
election-related communication is in the form of a hyperlink to the web
site of a candidate or party committee, the issues that arise are
similar to those discussed in section 4(b), above, regarding hyperlinks
posted on an individual's web site. The Commission invites comments on
these issues, as they arise in the context of web sites operated by
corporations and labor organizations.
With regard to the types of communication permitted under section
114.4(c) of the regulations, what special issues arise? How does the
use of the Internet to distribute voter guides, voting records,
absentee ballots or other registration or voting information impact the
current regulations? Are there aspects of these regulations that should
be revised?
For example, the Commission is interested in comments on several
issues that arise within the specific context of endorsements. As
explained above, the rules allow a corporation or labor organization to
announce an endorsement to the general public through a press release
and press conference, so long as distribution of the press release and
notice of the press conference is limited to those media
representatives that the organization ordinarily contacts when issuing
press releases or holding press conferences. 11 CFR 114.4(c)(6). Should
a corporation or labor organization that routinely posts press releases
on the Internet be allowed to post a press release announcing a
candidate endorsement? Would it matter if the corporation or labor
organization posts the endorsement release more prominently than it
posts other press releases? What if the release received no special
prominence or treatment? Or, should the endorsement be made accessible
only to members of the restricted class and other employees?
The Commission invites comments on these issues, and any other
issues raised by corporate and labor organization communication via the
Internet.
b. Internet Services as In-kind Contributions
Some corporations are in the business of providing Internet-related
services, such as Internet access, web site creation and maintenance,
technical support, etc. The Commission is interested in comments on
whether, and under what circumstances, the costs of Internet-related
services should be treated as in-kind contributions.
For example, in Advisory Opinion 1996-2, a corporation that
provided Internet services and other on-line information services
proposed to provide free member accounts to federal candidates on a
nonpartisan basis, and asked whether these accounts would be prohibited
in-kind contributions under the Act. The Commission concluded that the
accounts would be in-kind contributions unless the corporation could
show that it provided the accounts to nonpolitical customers in the
ordinary course of business and on the same terms and conditions, i.e.,
the ``usual and normal charge.'' The Commission also said that even if
the corporation could show that it provided free accounts in the
ordinary course of business, the promotional value derived by the
vendor in the form of prestige, goodwill, and increased usage by other
members did not constitute adequate consideration to satisfy the
``usual and normal charge'' requirement.
[[Page 60365]]
The Commission invites comments on whether this conclusion should
be revised or incorporated into the regulations, and on whether there
are circumstances under which the provision of Internet services at
less than the usual and normal charge should not be regarded as a
contribution or expenditure.
c. Use of Corporate Facilities
Section 114.9 of the regulations places limits on the extent to
which the stockholders and employees of a corporation, or the
officials, members and employees of a labor organization, may make use
of the facilities of the corporation or labor organization for
individual volunteer activities in connection with federal elections.
Generally, the rule allows occasional, isolated or incidental use of
the facilities, and requires users to reimburse the corporation or
labor organization only to the extent that the corporation or labor
organization's overhead costs are increased. The rule provides
additional guidance as to what will be considered occasional, isolated
or incidental use in particular situations.
The Commission is interested in comments on the application of this
rule to the use of corporate or labor organization facilities for
Internet activities conducted in connection with federal elections. To
what extent should a computer network be treated as part of a
corporation or labor organization's facilities within the meaning of
this provision? What level of use of such a network should be
considered occasional, isolated or incidental use? How should this be
determined?
If a corporation allows an employee to post candidate-related
materials on a web site that resides on the corporation's computer
network, should the employee be required to reimburse the corporation
for the costs of the site? What if the corporation's network has enough
surplus capacity that the web site would not increase its overhead or
operating costs? What if an employee uses the corporation or labor
organization's computer network to send an electronic mail message
soliciting contributions or expressly advocating the election or defeat
of a candidate? Has the corporation or labor organization provided
something of value?
7. News Organizations
a. On-line Publications
The Act contains an exception from the definition of
``expenditure'' for ``any news story, commentary, or editorial
distributed through the facilities of any broadcasting station,
newspaper, magazine, or other periodical publication, unless such
facilities are owned or controlled by any political party, political
committee, or candidate.'' 2 U.S.C. 431(9)(B)(i). Section 100.8(b)(2)
of the regulations also excludes ``any cost incurred in covering or
carrying a news story, commentary, or editorial by any broadcasting
station (including a cable television operator, programmer or
producer), newspaper, magazine, or other periodical publication'' from
the definition of ``contribution,'' unless the media outlet is owned or
controlled by a political party, political committee, or candidate.
The Commission is interested in comments on how these provisions,
generally referred to collectively as the ``news story exemption,''
should be applied to the Internet. Under what circumstances should the
Commission regard an Internet site as a ``newspaper, magazine, or other
periodical publication'' within the meaning of the exemption in section
431(9)(B)(i)? Should it make a difference whether the site owner also
produces a broadcast or print publication? Should a site be treated as
a periodical publication if the owner regularly revises or updates the
site? What, if any, additional characteristics should be required?
Some Internet publishers use ``list serves'' or other types of
electronic mailing lists that enable the publisher to send the
publication to all subscribers using a bulk e-mail message. Using this
method, the publisher can distribute the publication to a large number
of subscribers instantly, at very little cost. The Commission is
interested in comments on whether publication and distribution via a
list serve or other widely-distributed electronic mail communication
should fall within the news story exemption? Should it make a
difference whether recipients receive these communications without
requesting them, only after requesting them, or only after paying a
subscription fee? The Commission invites comments on these issues.
Questions also arise as to whether and when information distributed
via these sites would be a ``news story, commentary or editorial''
within in the meaning of the exemption. A similar issue arose in
Reader's Digest Association v. Federal Election Commission, 509 F.
Supp. 1210 (S.D.N.Y. 1981), in which Reader's Digest Association, a
magazine publisher, produced a videotape that featured a federal
candidate, and distributed it to various television stations and
networks. The videotape related to a story to be run in its print
edition. The court noted that the news story exemption ``would seem to
exempt only those kinds of distribution that fall broadly within the
press entity's legitimate press function.'' Id. at 1214. The court
concluded that the Commission was entitled to investigate the question
of whether Reader's Digest Association was acting as a press entity
when it produced and distributed the videotape.
The Commission invites comments on whether new rules are needed to
determine whether a news organization's Internet activities fall within
its legitimate press function. Are there types of web site content that
should be regarded as unrelated to the press function?
b. Candidate Appearances
The Commission is interested in comments on how the Act and
regulations should be applied when candidates make public appearances
via a web site operated by a news organization. These appearances can
take many different forms. New technologies make it possible for
candidates to appear on the Internet and interact with viewers in real
time. In some cases, the candidate might make a speech that is
broadcast on-line using streaming video technology. In other cases, a
web site or Internet service provider might invite its members,
subscribers, or the general public to attend a real-time on-line
interview with a candidate, and may also invite viewers to submit
questions for the candidate by electronic mail. It is also possible
that, in the future, candidate debates will either be conducted
entirely on-line, or will be simulcast on-line. In either case, viewers
may be invited to submit questions or comments to the participating
candidates.
The Commission addressed some of the issues raised by this activity
in Advisory Opinion 1996-16, in which a news and information service
proposed to invite presidential candidates to appear in a series of
electronic town meetings with the news service's subscribers. During
these town meetings, the candidates were linked via two-way television
to a live audience consisting of subscribers and other invited guests.
The candidates made brief introductory remarks and then answered
questions from the live audience. Other subscribers were able to listen
by telephone line and submit questions by electronic mail. Later, they
could view a multimedia version of the program on the service's
dedicated computer terminals.
[[Page 60366]]
The Commission concluded that town meetings fall within the press
exemption when the news service is a bona fide press entity. The
Commission reiterated two relevant considerations set out in the
statute: (1) Whether the press entity is owned by a political party or
candidate; and (2) whether the press entity is acting as a press entity
in performing the media activity. The Commission noted that the media
entity planned the meetings and therefore controlled the means of
presentation, the duration, and the format of the candidates'
appearances. Thus, the activity fell within the scope of the news story
exemption. The Commission invites comments on whether this conclusion
should be revised or incorporated into the regulations, and on other
issues raised by candidate appearances on the Internet.
c. On-line Discussions
Another area of campaign-related activity on the Internet is the
use of ``chat rooms'' and other fora for interactive discussions of
issues and candidates. Are there circumstances under which the sponsor
of such a forum should be responsible for statements made by persons
participating in the discussion? Does the sponsor make an expenditure
by providing a venue for individuals to expressly advocate on behalf of
a candidate?
8. Party Committees
The Commission is interested in comments on the impact of the Act
and regulations on the use of the Internet by political party
committees. One area in which the rules may impact party committee use
of the Internet is in the allocation of expenses between candidates
under 11 CFR 106.1. Section 106.1(a) states that
[e]xpenditures, including in-kind contributions, independent
expenditures, and coordinated expenditures made on behalf of more
than one clearly identified federal candidate shall be attributed to
each such candidate according to the benefit reasonably expected to
be derived. For example, in the case of a publication or broadcast
communication, the attribution shall be determined by the proportion
of space or time devoted to each candidate as compared to the total
space or time devoted to all candidates. In the case of a
fundraising program or event where funds are collected by one
committee for more than one clearly identified candidate, the
attribution shall be determined by the proportion of funds received
by each candidate as compared to the total receipts by all
candidates. These methods shall also be used to allocate payments
involving both expenditures on behalf of one or more clearly
identified federal candidates and disbursements on behalf of one or
more clearly identified non-federal candidates.
Party committee web sites often contain references to multiple
candidates. Should party committees be required to allocate the costs
of their web sites to the candidates mentioned on the site? If so,
should the ``time-space'' allocation method set out in section 106.1(a)
be applied? Should a party committee be required to take any reference
to a candidate, no matter how brief, into account in allocating the web
site's costs? Or, should the committee be able to limit its allocation
to more extensive references, and exclude candidates to whom only
minimal reference is made? Would it be adequate to exempt hyperlinks to
candidate web sites from the time-space allocation of a web site, but
include more extensive references?
Alternatively, should some or all of the expenses of a web site be
treated as ``overhead, general administrative, fund-raising, and other
day-to-day costs of political committees'' that need not be attributed
to individual candidates under section 106.1(c)(1)? The Commission
invites comments on these issues.
The Commission is also interested in the related issue of whether
the costs associated with references to candidates on a party committee
web site should count toward the party committee's coordinated
expenditure limit. Section 441a(d) of the Act states that the national
committee of a political party and a state committee of a political
party may make expenditures in connection with the general election
campaign of candidates for Federal office, up to certain dollar limits.
These limits apply to expenditures that are coordinated with the
party's candidates. See Colorado Republican Federal Campaign Committee
v. FEC, 518 U.S. 604 (1996). Under what circumstances should a party
committee's Internet expenditures count toward this limit?
Finally, the Commission encourages commenters to discuss any other
issues relating to the use of the Internet by party committees.
Reporting and Recordkeeping
The use of new avenues for conducting campaign activity often
raises reporting issues. Consequently, the Commission is interested in
comments on how the use of the Internet impacts the disclosure process.
1. Contributions Received Via the Internet
a. Reporting
In Advisory Opinion 1995-9, the Commission concluded that a
political committee could use the Internet to solicit and accept
contributions so long as the recordkeeping and reporting requirements
were met. The Commission cited previous advisory opinions in which it
``recognized that the Act and regulations allow lawful contributions to
be made not only by personal check, but also in other ways, including
properly documented use of credit cards (Advisory Opinions 1978-68 and
1984-45).'' As discussed above, the Commission also recently revised
its regulations to allow for matching of credit card contributions
received by Presidential primary candidates via the Internet. 64 FR
32,394 (June 17, 1999). See also Advisory Opinion 1999-9.
The Commission listed the reporting requirements that the
nonconnected committee in Advisory Opinion 1995-9 was required to
follow. The committee was required to itemize its receipts, and use
best efforts to obtain and submit the full name, mailing address,
occupation and name of employer of any person who makes contributions
that aggregate in excess of $200 in a calendar year. The Commission
also said that if a credit card company or other processing entity
deducts fees from the contribution before forwarding it to the
committee, those fees would be operating expenses of the committee, and
must be reported as such. (Note that, for publicly funded candidates,
these fees would be exempt fundraising expenses under 11 CFR
100.8(b)(21)). The committee was also required to report the full
amount paid by the contributor as a contribution, notwithstanding any
deductions by the credit card company. See 2 U.S.C. 434(b)(5)(A), 11
CFR 104.3(b)(3).
The Commission invites comments on whether these conclusions should
be revised or incorporated into the regulations, and on whether any
additional reporting requirements should be imposed on committees that
receive contributions via the Internet.
b. Screening prohibited and excessive contributions
Section 103.3(b) of the regulations states that the treasurer of a
political committee shall be responsible for examining all
contributions received for evidence of illegality and for ascertaining
whether contributions received, when aggregated with other
contributions from the same contributor, exceed the contribution
limitations of 11 CFR 110.1 or 110.2.
The Commission is interested in comments on whether additional
safeguards are needed to ensure that contributions received via the
Internet do not come from sources that are prohibited from making
contributions
[[Page 60367]]
under the Act, and do not exceed the contributions limits. Should the
regulations regarding the process of the screening contributions be
revised? Are more specific processing requirements needed to screen out
contributions from foreign nationals?
In Advisory Opinion 1995-9, the Commission endorsed a screening
procedure in which the web site soliciting contributions would list the
prohibitions in the Act, and ask contributors to specifically attest
that their contributions were both voluntary and permissible under each
prohibition. Potential contributors that did not do so would receive a
message stating that Federal law prohibits their contribution, and
inviting those who think they have filled out the contribution form
incorrectly to try again. The Commission also addressed the issue of
screening procedures in Advisory Opinion 1999-9. Should aspects of the
screening procedures described in these advisory opinions be
incorporated into the regulations? Should these procedures be modified?
The Commission invites comments on these issues.
2. Disbursements for Expenses Incurred in Internet Activity
The Commission is interested in comments on whether or not
disbursements for Internet-related expenses should be subject to the
reporting requirements? If so, how should costs associated with
establishing a campaign web site be reported? Should they be operating
expenses, or as some other type of expense? If the committee of a
publicly funded candidate uses its web site to solicit contributions,
should a portion of the cost of establishing and maintaining the site
be treated as exempt fundraising expenses under 2 U.S.C. 431(9)(B)(vi)
and 11 CFR 100.8(b)(21)? How should a committee report the initial
costs of the computer hardware obtained to host the site? What about
the costs of software purchased to create and maintain the site? How
should fees paid to Internet service providers be reported?
Comments are also welcome on whether the reporting requirements
should be applied to a web site that is only partially devoted to
candidate advocacy. If so, how should the costs associated with the
candidate-related portion of the site be determined and reported?
Similar issues arise in relation to a multicandidate committee web
site that mentions several candidates. As discussed above in relation
to party committees, section 106.1 of the Commission's current
regulations requires multicandidate committees to attribute
expenditures made on behalf of more than one candidate to each
candidate according to the benefit reasonably expected to be derived.
11 CFR 106.1(a)(1). Should a multicandidate committee whose web site
expresses support for several candidates be required to allocate the
costs of the site? If so, should the time-space allocation method in
section 106.1(a)(1) be used to allocate those costs between the
specifically identified candidates? Or, should the costs of the web
site be treated the same as the committee's other administrative
expenses, and allocated in accordance with 11 CFR 106.6(c)?
3. Recordkeeping
The use of the Internet for campaign activity also raises questions
regarding the retention of campaign records. Sections 432(c) and (d) of
the FECA require treasurers to create and maintain records of committee
transactions, and preserve those records for three years after filing
the associated report. In the case of reports filed electronically,
machine-readable copies of committee reports must be maintained for
three years.
In Advisory Opinion 1995-9, discussed above, the Commission
concluded that the requesting committee could maintain records of
contributions received via the Internet in non-paper form so long as
the electronic records contained the information required by the
statute, and were retained for three years.
The Commission is interested in comments on the types of records
committees should be required to keep regarding transactions conducted
via the Internet. Should these records be maintained differently than
those made using traditional media? Should the conclusion reached in
Advisory Opinion 1995-9 regarding retention of records be revised or
explicitly stated in the regulations?
Other Issues
1. Electronic Mail
Many aspects of the campaign finance process involve the use of the
mail. The Commission is interested in comments on how broadly it should
treat electronic mail as a substitute for regular mail.
For example, section 432(i) of the FECA requires treasurers of
political committees to exercise ``best efforts'' to report the
complete identification of each contributor whose contributions
aggregate more than $200 per calendar year. 2 U.S.C. 434(b)(3)(A). For
an individual, ``identification'' means the full name, mailing address,
occupation and employer. 2 U.S.C. 431(13). If a contributor fails to
provide this information, the Commission's rules require the recipient
committee to make one oral or written follow-up attempt to obtain the
contributor information for any contribution that exceeds $200 per
calendar year. 11 CFR 104.7(b)(2)
The threshold question presented is whether a follow-up attempt
sent by electronic mail should satisfy the best efforts requirement. In
Advisory Opinion 1995-9, the Commission determined that, in the case of
a contribution received via the Internet, the follow-up request could
consist of an electronic message sent to the contributor's e-mail
address. However, the request must be sent after the committee received
the credit card company's confirmation of the contribution, and must
meet the specific ``best efforts'' requirements set forth in 11 CFR
104.7(b)(2).
The Commission is interested in comments on whether the conclusion
reached in Advisory Opinion 1995-9 regarding the use of electronic mail
for best efforts follow-up communications should be revised or
incorporated into the regulations. If so, how should the rules address
situations where a committee's follow-up request is not successfully
delivered to the contributor? For example, if the contributor has
changed his or her e-mail address, he or she would not receive the
follow-up request directly. Furthermore, if the contributor has not
arranged for e-mail sent to his or her old address to be forwarded, he
or she may not receive the request at all. In addition, the committee's
follow-up request might reach the contributor's former address before
that account has been completely deactivated by the Internet service
provider. In that case, the committee would not receive an error
message indicating that its follow-up request was undeliverable, and
thus might not be aware that its follow-up request had not reached the
contributor. How should the rules address these situations?
Should the Commission extend Advisory Opinion 1995-9 to allow
committees to use electronic mail to follow up on contributions
received by regular mail? Are contributors more likely to provide
information when prompted to do so by a computer than they are when
they are prompted by regular mail or a phone call?
Finally, the Commission is interested in comments on whether there
are circumstances in which the disclaimer requirement should apply to
electronic
[[Page 60368]]
mail. As explained above, section 441d of the FECA states that
``[w]henever any person makes an expenditure for the purpose of
financing communications expressly advocating the election or defeat of
a clearly identified candidate, or solicits any contribution through
any broadcasting station, newspaper, magazine, outdoor advertising
facility, direct mailing, or any other type of general public political
advertising,'' the communication must contain a disclaimer statement.
See also 11 CFR 110.11. Comments are welcome on the question of whether
list serves or other forms of electronic mail that are distributed to
large numbers of recipients in bulk should be regarded as general
public political advertisements for which a disclaimer is required.
The Commission is also interested in comments on any other issues
raised by the use of electronic mail for candidate or election-related
activity.
2. Membership
Section 441b(b)(4)(A) prohibits a corporation and its separate
segregated fund from soliciting contributions from persons other than
its stockholders and their families or its executive or administrative
personnel and their families. However, under paragraph (b)(4)(C), a
membership organization or its the separate segregated fund may solicit
contributions from ``members'' of the organization. The Commission
recently approved new rules defining the term ``member.'' 64 FR 41,266
(Jul. 30, 1999). These rules are currently before Congress pending
legislative review.
Because of the increasing availability of the Internet, there may
now be organizations that exist almost entirely on-line. Persons
visiting the web site of such an organization may be invited to become
members of the organization. Are there special considerations in
determining whether these organizations qualify as ``membership
organizations?'' Are there additional factors in evaluating whether
someone is a ``member'' of an on-line membership organization?
3. Draft Committees
Periodically, groups form to encourage, or ``draft,'' someone to
become a candidate for a particular office. The Internet may be the
ideal vehicle for draft committees to use to generate support for their
prospective candidates.
The Commission is interested in comments on the use of the Internet
by draft committees. The current rules contain only one provision that
is directed specifically at draft committees. Section 102.14(b)(2)
states that ``[a] political committee established solely to draft an
individual or to encourage him or her to become a candidate may include
the name of such individual in the name of the committee provided the
committee's name clearly indicates that it is a draft committee.''
Should the rules be revised to address other aspects of draft committee
activities? Do web sites established by draft committees raise any
special issues under the FECA? The Commission is interested in comments
on these issues.
Conclusion
The Commission invites comments on these issues, and on any other
issues related to the use of the Internet for campaign activity.
Dated: November 1, 1999.
Scott E. Thomas,
Chairman, Federal Election Commission.
[FR Doc. 99-28982 Filed 11-4-99; 8:45 am]
BILLING CODE 6715-01-U
