FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 110 and 114

[Notice 2005 � X]

Internet Communications

AGENCY:�� Federal Election Commission.

ACTION:�� Notice of Proposed Rulemaking.

SUMMARY:�� The Federal Election Commission requests comments on proposed changes to its rule that would include paid advertisements on the Internet in the definition of �public communication.�� These changes to the Commission�s rule would implement the recent decision of the U.S. District Court for the District of Columbia in Shays v. Federal Election Commission, which held that the current definition of �public communication� impermissibly excludes all Internet communications.� Comment is also sought on the related definition of �generic campaign activity� and on proposed changes to the disclaimer regulations.� Additionally, comment is sought on proposed new exceptions to the definitions of �contribution" and �expenditure� for certain Internet activities and communications that would qualify as individual volunteer activity or that would qualify for the "press exemption."� These proposals are intended to ensure that political committees properly finance and disclose their Internet communications, without impeding individual citizens from using the Internet to speak freely regarding candidates and elections.� The Commission has made no final decision on the issues raised in this rulemaking.� Further information appears in the supplementary information that follows.

DATES:�� Comments must be received on or before [INSERT DATE 60 DAYS AFTER THE DATE OF PUBLICATION IN THE FEDERAL REGISTER].� The Commission will hold a hearing on the proposed rules on [INSERT DATE OF HEARING] at 9:30 a.m.� Anyone wishing to testify at the hearing must file written comments by the due date and must include a request to testify in the written comments.

ADDRESSES:�� All comments must be in writing, must be addressed to Mr. Brad C. Deutsch, Assistant General Counsel, and must be submitted in either electronic, facsimile, or hard copy form.� Commenters are strongly encouraged to submit comments electronically to ensure timely receipt and consideration.� Electronic comments must be sent to either internet@fec.gov or submitted through the Federal eRegulations Portal at <www.regulations.gov>.� Any commenters who submit electronic comments and wish to testify at the hearing on this rulemaking must also send a copy of their comments to internettestify@fec.gov.� If the electronic comments include an attachment, the attachment must be in the Adobe Acrobat (.pdf) or Microsoft Word (.doc) format.� Faxed comments must be sent to (202) 219-3923, with hard copy follow-up.� Hard copy comments and hard copy follow-up of faxed comments must be sent to the Federal Election Commission, 999 E Street, N.W., Washington, D.C. 20463.� All comments must include the full name and postal service address of the commenter or they will not be considered.� The Commission will post comments on its website after the comment period ends.� The hearing will be held in the Commission�s ninth floor meeting room, 999 E Street, N.W., Washington, D.C.

for further

INFORMATION

contact:�� Mr. Brad C. Deutsch, Assistant General Counsel, Ms. Amy L. Rothstein, Mr. Richard T. Ewell, or Ms. Esa L. Sferra, Attorneys, 999 E Street, N.W., Washington, D.C. 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY

INFORMATION:��

I.� Introduction

The Bipartisan Campaign Reform Act of 2002, Pub. L. 107-155, 116 Stat. 81 (March 27, 2002) (�BCRA�), amended the Federal Election Campaign Act of 1971, as amended, 2 U.S.C. 431 et seq. (the �Act�), in many respects.� Four of these amendments are germane to this rulemaking.

First, section 441i(b) of BCRA requires State, district, and local political party committees to use only Federal funds[1] for certain types of �Federal election activity,� including for any �public communication that refers to a clearly identified candidate for Federal office . . . and that promotes or supports a candidate for that office, or attacks or opposes a candidate for that office[.]�[2]� 2 U.S.C. 431(20)(A)(iii) (emphasis added).�� BCRA defines a �public communication� as �a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising.�� 2 U.S.C. 431(22) (emphasis added).

Second, section 441i(b) of BCRA also restricts the funds that State, district, and local political party committees may use for certain "generic campaign activity."� 2 U.S.C. 431(20)(A)(ii); 11 CFR 100.24(2)(ii).� BCRA defines �generic campaign activity� as �campaign activity that promotes a political party and does not promote a [Federal] candidate or non-Federal candidate.�� 2 U.S.C. 431(21).� �Generic campaign activity� by State, district, and local party committees conducted in connection with an election in which a candidate for Federal office appears on the ballot (regardless of whether a candidate for State or local office also appears on the ballot) must be paid for either entirely with Federal funds or with an allocated mix of Federal funds and Levin funds.[3]� See 2 U.S.C. 441i(b)(2)(A); 11 CFR 300.32(b)(1)(ii), 300.32(c) and 300.33.

Third, BCRA expressly repealed the Commission�s then-existing rules on �coordinated general public political communication� at former 11 CFR 100.23, Public Law 107�155, sec. 214(b) (March 27, 2002), and instructed the Commission to promulgate new regulations on �coordinated communications paid for by persons other than candidates, authorized committees of candidates, and party committees.�� Public Law 107�155, sec. 214(c) (March 27, 2002).�

Fourth, Congress revised the �disclaimer� requirements in 2 U.S.C. 441d, by requiring a disclaimer when a �disbursement� (rather than an �expenditure�) is made for certain communications.��

The Commission promulgated regulations in 2002 to implement BCRA's provisions regarding (1) �public communication,� (2) �generic campaign activity,� (3) coordination with candidates and political parties, and (4) disclaimers.� See Final Rules on Prohibited and Excessive Contributions; Non-Federal Funds or Soft Money, 67 FR 49,064 (July 29, 2002) (�Soft Money Final Rules�); Coordinated and Independent Expenditures, 68 FR 421 (Jan. 3, 2003); Disclaimers, Fraudulent Solicitation, Civil Penalties, and Personal Use of Campaign Funds, 67 FR 76,962 (Dec. 13, 2002).

In Shays v. Federal Election Commission, 337 F.Supp.2d 28 (D.D.C.) appeal filed, No. 04-5352 (D.C. Cir. Sept. 28, 2004) (�Shays�), the United States District Court for the District of Columbia overturned some of these regulations.� First, the district court held that excluding all Internet communications from the Commission�s rule defining �public communication� in 11 CFR 100.26 was inconsistent with Congress�s use of the phrase �or any other form of general public political advertising� in BCRA�s definition of �public communication..�[4]� Shays at 69.� The district court concluded that �[w]hile all Internet communications do not fall within [the scope of �any other form of general public political advertising�], some clearly do.�� Id. at 67.� The court left it to the Commission to determine �what constitutes �general public political advertising� in the world of the Internet,� and thus should be treated as a �public communication.�.� Id. at 70.�

Second, the district court found the Commission�s rule defining the term �generic campaign activity� to be �an impermissible construction of the Act,� to the extent it incorporated the regulatory definition of �public communication,� which excludes all forms of Internet communications.� Id. at 112.� Although the court specifically approved the definition of �generic campaign activity� as a �public communication�, the Shays court found that the 2002 Notice of Proposed Rulemaking for �generic campaign activity� did not provide adequate notice to the public that the Commission might define �generic campaign activity� as a �public communication� in the final rules.� Id. at 112; Notice of Proposed Rulemaking on Prohibited and Excessive Contributions; Non-Federal Funds or Soft Money, 67 FR 35,654, 35,675 (May 20, 2002).�

Third, the district court invalidated the �content prong� of the Commission's coordinated communications rule at 11 CFR 109.21(c), which incorporates the definition of �public communication� at 11 CFR 100.26.� The Shays court found that expenditures for communications that have been coordinated with a candidate, a candidate�s authorized committee, or a political party committee have value for, and therefore are in-kind contributions to, that candidate or committee, regardless of the content, timing, or geographic reach of the communications.� Shays at 63-64.� Accordingly, the court held that certain regulatory exclusions contained in the �content prong� �undercut [the Act�s] statutory purpose of regulating campaign finance and preventing circumvention of the campaign finance rules.� Id. at 63.�

The district court remanded each of these rules to the Commission for further action consistent with its opinion.� Accordingly, the Commission is issuing this Notice of Proposed Rulemaking (�NPRM�), which addresses several topics.� First, the proposed rules in 11 CFR 100.26 would identify the types of Internet communications that are forms of �general public political advertising� and that therefore would qualify as public communications.� Specifically, the Commission proposes to retain a general exclusion of Internet communications from the definition of �public communication,� except for those advertisements where another person or entity has been paid to carry the advertisement on its website, because these communications would constitute �general public political advertising..�� This proposed change addresses the Shays court�s concern about the wholesale exclusion of all Internet communications from the definition of �public communication..�� Because only Internet communications that constitute �general public political advertising,� as defined by the regulation, would be included in the proposed definition of �public communication� in section 100.26, the Commission anticipates that the proposed definition would have an extremely limited impact, if any, on the use of the Internet by individuals as a means of communicating their political views, obtaining information regarding candidates and elections, and participating in political campaigns.

Second, this NPRM republishes and invites comment on the current definition of �generic campaign activity� in section 100.25, which includes the term �public communication..�� The Commission notes that any changes to the underlying definition of �public communication� pertaining to the Internet would automatically apply to �generic campaign activity..�

Third, the Commission proposes to modify somewhat its rules at 11 CFR 110.11(a) as to which Internet communications require disclaimers.� Political committee websites would continue to need disclaimers.� Individuals and entities other than political committees, however, would need to place disclaimers only on paid Internet advertisements (i.e., Internet communications that constitute �general public political advertising� under the proposed definition of �public communication�) if the advertisements either solicit contributions or expressly advocate the election or defeat of a clearly identified candidate for Federal office.� The Commission also proposes to clarify the current requirement that disclaimers be included in �unsolicited electronic mail of more than 500 substantially similar communications� by defining �unsolicited� as �those e-mails that are sent to electronic mail addresses purchased from a third party.�� The goal of this proposed change would be to continue to require disclaimers on political �spam,� without interfering with individuals who participate in large on-line communities.��

In addition, the Commission is proposing to add new rules specifically excepting certain volunteer activity ~~using~~on the Internet from the definitions of �contribution� and �expenditure,� and by clarifying that the rules in section 114.9 regarding the use of corporate or labor organization facilities apply to the use of computer equipment and Internet services.� Lastly, the proposed rules seek to establish an Internet exception from the definitions of "contribution" and "expenditure" for certain media activity.

The Commission has announced plans to initiate a separate rulemaking on certain non-Internet aspects of the coordinated communication rules at 11 CFR 109.21(c) in the coming months.� For purposes of this rulemaking, the coordinated communication rules are referenced only to provide notice that the proposed changes to the definition of �public communication� in 11 CFR 100.26 would have an impact on the scope of the coordinated communication rules.

II.� 11 CFR 100.26 � Definition of �Public Communication�

BCRA defines a �public communication� as �a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing or telephone bank to the general public, or any other form of general public political advertising.�� 2 U.S.C. 431(22).� The Commission's current rules at 11 CFR 100.26 track the statutory definition, except that the definition in the rules explicitly excludes all communications over the Internet.

As a consequence, Internet communications are excluded from other rules governing the funding of a �public communication..�� For example, State, district, and local political party committees and organizations must use only Federal funds for any �public communication� that promotes, supports, attacks or opposes a Federal candidate.� See 2 U.S.C. 431(20)(A)(iii) and 441i(b); 11 CFR 100.24(b)(3) and (c)(1), 300.32(a)(1) and (2).� In addition, these party committees must use all Federal funds or an allocable mix of Federal funds and Levin funds for any �public communication� that constitutes �generic campaign activity� in connection with an election in which a candidate for Federal office appears on the ballot.� See 11 CFR 100.25; 11 CFR 300.33(a)(2).

The term "public communication" is also used to determine whether a disclaimer is needed on certain communications under 11 CFR 110.11.� Moreover, the �public communication� definition is one key element in determining what qualifies as a coordinated communication under 11 CFR 109.21 and a party coordinated communication under 11 CFR 109.37.� �Public communication� may also be used to determine whether a person is an agent of a candidate for State or local office in 11 CFR 300.2(b)(4), and whether certain expenses must be allocated between Federal and non-Federal accounts by separate segregated funds (�SSFs�) and nonconnected committees under 11 CFR 106.6(b) and (f).

In light of the Shays decision, the Commission is reconsidering which Internet communications would qualify as �general public political advertising,� and thus would be a �public communication..�� The Commission�s proposed rule attempts to strike a balance between provisions of the Act that regulate �general public political advertising� and significant public policy considerations that encourage the Internet as a forum for free or low-cost speech and open information exchange.

A.� The Internet and the 2004 Elections

The Internet has unique characteristics that distinguish it from traditional media.[5]� Unlike traditional media, �the Internet can hardly be considered a �scarce� expressive commodity.� It provides relatively unlimited, low-cost capacity for communication of all kinds.�� Reno v. ACLU, 521 U.S. 844, 870 (1997) (�Reno�).� Additionally, because an Internet communication is not limited in format and is not necessarily limited in duration, unlike television and radio programming, the Internet provides a means to communicate with a large and geographically widespread audience, often at little cost.[6]

The Internet also differs from traditional media because individuals must generally be proactive in order to access information over the Internet, unlike users of traditional media.� The Supreme Court has found that communications over the Internet are not as �invasive� as communications through traditional media.� Reno at 870.� In further contrast to passive, one-way traditional media, the Internet can provide interactive, real-time, two-way communications.

The Internet�s accessibility, low-cost, and interactive features make it a popular choice for sending and receiving information.� In 2004, an estimated 201 million people in the United States used the Internet.[7]� At the end of 2004, an estimated 63 percent of the adult American population, and 81 percent of American teenagers, used the Internet; on average, some 70 million American adults logged onto the Internet daily.[8]

A growing segment of the American population uses the Internet as a supplement to, or as a replacement for, more traditional sources of information and entertainment, such as newspapers, magazines, television, and radio.� In mid-2004, 92 million Americans reported obtaining news from the Internet.[9]�

As the public has turned increasingly to the Internet for information and entertainment, advertisers have embraced the Internet and its new marketing opportunities.� Internet advertising revenue increased by 21 percent between 2002 and 2003 and reached $4.6 billion in the first six months of 2004.[10]�

The 2004 election cycle marked a dramatic shift in the scope and manner in which citizens used websites, blogs,[11] listservs,[12] and other Internet communications to obtain information on a wide range of issues and candidates.[13]� The number of Americans who used the Internet as a source of campaign news more than doubled between 2000 and 2004, from 30 million to 63 million.[14]� An estimated 11 million people relied on politically oriented blogs as a primary source of information during the 2004 presidential campaign,[15] and a full 18 percent of all Americans cited the Internet as their leading source of news about the 2004 presidential election.[16]

B.� Internet Communications � Proposed 11 CFR 100.26�

Because the Internet is a unique form of communication, the Commission proposes to preserve the general exclusion of Internet communications from the definition of �public communication� in 11 CFR 100.26.

At the same time, however, the Commission recognizes that Internet communications may, in some circumstances, constitute �general public political advertising� within the definition of �public communication� in 11 CFR 100.26.�

Accordingly, the Commission proposes to amend 11 CFR 100.26 to include �general public political advertising� in the form of paid Internet advertisements placed on another individual�s or entity�s website.� Such advertisements could take the form, for example, of streaming video that appears in a banner advertisements, or �pop-up� advertisements.[17]��

The Commission invites comment on whether announcements placed for a fee on another entity�s website should be considered �general public political advertising,� and therefore, a �public communication� under 11 CFR 100.26.� Is this approach consistent with BCRA�s definition of �public communication� to include broadcast, cable or satellite communications, newspaper, magazines and outdoor advertising facilities, all of which typically charge fees to those who run political advertisements?�

If a mode of communication does not cost any money, can it be �general public political advertising� and therefore a �public communication� within the meaning of the statute?� For example, a person might appear in a public square and give a campaign speech before 500 or more people.� If such a public speech does not cost any money to undertake, is it outside the scope of �general public political advertising� under the statute and therefore not a �public communication�?� Likewise, is such a public speech outside the scope of an �expenditure� or �contribution� under the statute?� Also, should �general public political advertising� include Internet advertisements where a the advertising space was provided for something of value other than a monetary payment, for example through an exchange of comparable advertising? �Although the Commission rule excludes iInternet activity that is not placed for a fee, should the Commission amend its regulation to explicitly state that it is not including �bloggers� in the definition of �public communication�?

The Act and Commission regulations recognize that corporations and labor organizations can communicate with their restricted class, but not with the general public, on �any subject,� and that membership organizations may similarly communicate with their members.� See 2 U.S.C. 431(9)(B)(iii) and 441b(b)(2)(A); 11 CFR 100.134(a) and 114.3(c)(3); see also AO 1997-16.� Should the Commission consider excluding from the definition of �general public political advertising� paid advertisements appearing on corporate and labor organization websites if access to those sites is restricted to the restricted class of a corporation or labor organization, or to only the members of a membership organization?

C.� Effect of Proposed Definition of "Public Communication" on Federal Election Activity by State, District, and Local Party Committees under 11 CFR 100.24(b) and (c)

BCRA defines �Federal election activity� to include �a public communication that refers to a clearly identified candidate for Federal office . . . and that promotes or supports a candidate for that office, or attacks or opposes a candidate for that office[.]�� 2 U.S.C. 431(20)(A)(iii); see also 11 CFR 100.24(b)(3).� State, district, and local political party committees and organizations, State and local officeholders and candidates, and their agents, are prohibited from using non-Federal funds to pay for this type of Federal election activity.� See 2 U.S.C. 441i(b) and (f); 11 CFR 100.24(b)(3) and (c)(1), 300.32(a)(1) and (2), and 300.71.�

The Commission notes that the original definition of 100.26 was promulgated to permit State, district, and local committees to make references to their fFederal candidates on the committees� official websites without automatically federalizing the year-round costs of maintaining such a site.� It should be noted that this effect of the Internet exclusion was not rejected by the Shays court.� The proposed rule would continue to allow this exclusion for these websites, while requiring that state, district, and local party committees use exclusively fFederal dollars to place advertisements that promote, support, attack, or oppose (�PASO�) a fFederal candidate on another individual�s or entity�s website.� State, district, and local committee websites must still maintain disclaimers as required under 11 CFR 110.11(a)(1).�

The Commission invites comment on this approach and on whether the Commission should consider further changing its definition of �public communication..�� If a mere PASO reference to a fFederal candidate on a State, district, or local committee�s website were to constitute a public communication, does that require that the entire website be paid for with hard dollars?� If not, the Commission seeks comment on how to allocate that portion of the website that must be paid for with hard dollars � -- for example, based on the time and space of the website that contains PASO communications as compared to the site overall, or should another allocation method be required?� In addition, what costs should be included in the allocation calculations �; all of the costs associated with establishing and maintaining the website, or only the marginal costs of creating and maintaining the PASO communication, or some other formulation?�

The Commission seeks comment on whether any payment by a State, district, or local party to an outside vendor for content that PASO�s a Federal candidate that is exclusively placed on the party�s website should constitute �general public political advertising� and be deemed a �public communication,� thus requiring regulation under 2 U.S.C. 441i(b)(1).

III.� 11 CFR 100.25 � Definition of �Generic Campaign Activity�

��Federal election activity� includes �generic campaign activity� conducted in connection with an election in which a candidate for Federal office appears on the ballot.� 2 U.S.C. 431(20(A) and 11 CFR 100.24.� BCRA defines "generic campaign activity" to mean "campaign activity that promotes a political party and does not promote a candidate or non-Federal candidate."� The Commission�s regulations construe this statutory term to mean �a public communication that promotes or opposes a political party and does not promote or oppose a clearly identified Federal candidate or a non-Federal candidate.�� 11 CFR 100.25 (emphasis added).

As noted above, the Shays court rejected the Commission�s definition of �generic campaign activity� on two grounds: first, that it improperly excluded all Internet communications and, second, for lack of notice to the public that it would be limited to �public communications� as defined in 11 CFR 100.26.� The Commission proposes to address the district court�s first concern by revising the definition of �public communication� to remove the wholesale exclusion of all Internet communications and to replace it with a more limited exclusion, as explained above.� The Commission is addressing the court�s second concern by providing the public with notice and an opportunity to comment at this time on whether the Commission should continue to define the term �generic campaign activity� as �a public communication,� which, as proposed, would include some types of Internet advertisements.� Given that Shays specifically approved the existing definition of �generic campaign activity,� except for the exclusion of Internet communications and the notice issue, the Commission is not proposing to revise the definition of �generic campaign activity� at this time.� The Commission invites comments on this approach.�

IV.� 11 CFR 110.11 � Communications; advertising; disclaimers (2 U.S.C. 441d)

With its relatively low-cost, wide availability, and ease of access, the Internet is used by millions of individuals daily to share information and air their views on a variety of subjects. The Commission recognizes that significant policy reasons support the continued exclusion of most Internet communications from the disclaimer requirements.�

As the Commission has stated previously, the Internet �is a medium that allows almost limitless, inexpensive communication across the broadest possible cross-section of the American population.� Unlike media such as television and radio, where the constraints of the medium make access financially prohibitive for the general population, the Internet is by definition a bastion of free political speech, where any individual has access to almost limitless political expression with minimal cost.�� Soft Money Final Rules, 67 FR at 49,072.� To this extent, the Internet can be the modern equivalent of a soapbox in a public square.� See Reno v. ACLU, 521 U.S. 844, 870 (1997) (�Through the use of chat rooms, any person with a phone line can become a town crier with a voice that resonates farther than it could from any soapbox. Through the use of Web pages, mail exploders, and newsgroups, the same individual can become a pamphleteer.�)��

The Commission notes that with respect to most Internet websites and blogs, the burden of complying with a disclaimer requirement, and the resources needed for the Commission to monitor such a requirement could outweigh the value of disclosure.� This is particularly true given that the identity of the sponsor of an Internet communication is often already apparent from the face of the communication.� The Commission seeks comment on these policy rationales and alternative approaches to the disclaimer requirement.

The Act and the Commission�s rules require certain communications to include clear and conspicuous statements to the public regarding the sources of their funding.� See 2 U.S.C. 441d; 11 CFR 110.11.� This disclaimer notice must identify the payor and disclose either the name of the candidate�s committee that authorized the communication or the fact that no candidate or candidate�s committee authorized the communication.� See 2 U.S.C. 441d(a); 11 CFR 110.11(b).� If the disclaimer notice states that the communication was not authorized by a candidate or candidate�s committee, the notice must disclose the payor�s full name and street address, telephone number, or World Wide Web address.� See 2 U.S.C. 441d(a)(3); 11 CFR 110.11(b)(3).� Political committees must include a disclaimer on any �public communication� for which they make disbursements.� See 11 CFR 110.11(a)(1).� For all other persons, a disclaimer is required for any �public communication� that expressly advocates the election or defeat of a clearly identified candidate for Federal office or that solicits contributions.� See 11 CFR 110.11(a)(2) and (3).[18]� The Commission notes that the lack of an affirmative disclaimer requirement for most Internet activities does not alleviate a duty to comply with 2 U.S.C. 441h prohibitions against fraudulent misrepresentation. The Commission originally promulgated these regulations to focus on what is commonly referred to as �spam� e-mail.�

A.�� Scope of Disclaimer Requirements � Proposed 11 CFR 110.11(a)

In the existing disclaimer regulations in section 110.11(a), the term �public communication� differs slightly from the term �public communication� as defined in 11 CFR 100.26.� Specifically, �public communication� as defined in current 11 CFR 100.26 expressly excludes Internet communications, whereas �public communication� as defined in the current disclaimer regulations includes �unsolicited electronic mail of more than 500 substantially similar communications and Internet websites of political committees available to the general public.�� 11 CFR 110.11(a).� Thus, political committees must include disclaimers on their websites available to the general public, and in unsolicited e‑mail of more than 500 substantially similar communications.� Other persons must also provide disclaimers in unsolicited e-mail of more than 500 substantially similar communications that expressly advocate the election or defeat of a clearly identified Federal candidate or solicit a contribution.��

The Commission is concerned that the current regulation emphasizes the number of e-mail communications sent, rather than focusing on whether an expenditure was made that would justify governmental regulation.� The Commission notes that the statute generally seems to be predicated on an �expenditure� or �disbursement� being made.� The Commission is not interested in requiring disclaimers on the personal communications of private citizens.� The Commission is concerned that the lack of definition for the term �unsolicited,� could have the effect of discouraging individuals from engaging in discussion and advocacy that is core political speech protected by the First Amendment and that is virtually cost-free.�

Therefore, the Commission is proposing to change the disclaimer requirement in 11 CFR 110.11(a) to focus on those e-mail communications for which the e-mail addresses of the recipients were acquired through a commercial transaction.� Such a disclaimer requirement is intended to strike a balance between the disclosure purposes of the Act and regulation of expenditures, and the protection of individual free speech and robust communication. �The Commission seeks comment on this approach.� Should the Commission continue to include a 500-e-mail threshold?� Given the ease of sending large numbers of e-mail, would a larger numerical threshold be appropriate?� The Commission also seeks comment on whether a minimum cost should be included in this disclaimer requirement, such as the $250 threshold contained in the statute for independent expenditures.� See 2 U.S.C. 434(c)(1).� Should a dollar threshold be included in concert with or in lieu of the 500-piece requirement?� Is there a more appropriate definition of �unsolicited� e-mail in this context?� Should �unsolicited� e-mail include e-mail where the recipients� e-mail addresses were acquired from a third party in a non-cash transaction, either through an e-mail list �swap,� or other multi-party transactions where list of e-mail addresses is acquired at no cost?� The Commission, alternatively, seeks comments on whether the disclaimer requirement for e-mail should be removed entirely from the regulation.�

The revisions to the disclaimer provisions in 11 CFR 110.11(a) would still require disclaimers for any �public communication� as defined at 11 CFR 100.26 made by a political committee, and for any �public communication� by any person that expressly advocates the election or defeat of a clearly identified Federal candidate or that solicits a contribution.� See 11 CFR 110.11(a).� The proposed definition of �public communication� in section 100.26 would have the effect of expanding the scope of the disclaimer requirements in section 110.11 to any advertisement placed for a fee on another party�s website that expressly advocates the election or defeat of a clearly identified Federal candidate or solicits a contribution.�� In addition, political committees would continue to be required to post disclaimers on their websites provided that they are �available to the general public.�

The Commission seeks comments on these proposed revisions to 11 CFR 110.11(a).

The Commission is concerned that the current regulation emphasizes the number of e-mail communications sent, rather than focusing on whether an expenditure was made that would justify governmental regulation.� The Commission notes that the statute generally seems to be predicated on an �expenditure� or �disbursement� being made.� The Commission is not interested in requiring disclaimers on the personal communications of private citizens.� The Commission is concerned that what may be considered a relatively low numerical threshold, coupled with the lack of definition for the term �unsolicited,� could have the effect of discouraging individuals from engaging in discussion and advocacy that is core political speech protected by the First Amendment and that is virtually cost ~~free.�~~

Therefore, the Commission is proposing to change the disclaimer requirement in 11 CFR 110.11(a) to focus on those e-mail communications for which either the e-mail addresses of any of the recipients were acquired through a commercial transaction, or for which another party is paid to create or transmit the e-mail communication.� Such transactions would not include routine payments for email and Internet access and associated services provided by an Internet Service Provider.� The Commission seeks comment on whether any other transactions should not be included?� Such a disclaimer requirement is intended to strike a balance between the disclosure purposes of the Act and regulation of expenditures, and the protection of individual free speech and robust communication.� The Commission seeks comment on this approach.� Should the Commission adopt this approach, but continue to include a 500 e-mail threshold?� Given the ease of sending large numbers of e-mail, would a larger numerical threshold be appropriate?� The Commission also seeks comment on whether a minimum cost should be included in this disclaimer approach, such as the $250 threshold contained in the statute for independent expenditures.� See 2 U.S.C. 434(c)(1).��

The Commission also seeks comment on whether to retain the current email disclaimer requirements.� If such an approach is retained, the Commission seeks comment on whether the numeric threshold should be increased and whether the Commission should define the term �unsolicited.�� The Commission, alternatively, seeks comments on whether a disclaimer requirement for e-mail should be removed entirely from the regulation.�

~~The Commission seeks comments on these proposed revisions to 11 CFR 110.11(a).~~B.� Bloggers Paid By Candidates

�� News reports indicate that in the 2004 elections some individual bloggers received significant fees from the campaign committees of at least one presidential candidate and one Senate candidate to promote the candidates� campaigns on their blogs.[19]� For example, the operator of the ninth most �linked� blog on the Internet, which received as many as one million visits daily, reportedly received $12,000 over a four-month period from one presidential candidate.[20]� The news reports further indicate that not all of the bloggers disclosed the payments to the blogs� readers.

The Commission notes that its current rules require a political committee to disclose this type of disbursement on its publicly available reports filed with the Commission.� The Commission does not therefore propose to change the disclaimer regulation in 11 CFR 110.11(a) to require bloggers to disclose payments from a candidate, a campaign, or a political committee.� The Commission seeks comment on this approach.� Should bloggers be required to disclose such payments?� Should a blogger be required to disclose payments only if the blogger expressly advocates the election or defeat of a clearly identified candidate or solicits a contribution?� Would a payment by a political committee to a blogger for promotional content on the blog constitute �general public political advertising� within the meaning of 100.26?

V.� 11 CFR 109.21 and 109.37 � Coordinated Communications

�� A. Content Standards for Coordinated Communications � 11 CFR 109.21(c)

Payments for certain communications that are coordinated with a candidate, a candidate�s authorized committee, a political party committee, or any of their agents, are treated as in-kind contributions to the candidate, the candidate�s authorized committee, or the political party committee.� See 2 U.S.C. 441a(a)(7); 11 CFR 109.21.� The Commission�s regulations set out a three-pronged test for determining whether a communication has been �coordinated.�� See 11 CFR 109.21.� The three-pronged test looks, in part, at whether the communication satisfies the �content prong� of 11 CFR 109.21(c).[21]� To satisfy the �content prong� of the coordinated communication test, a communication must:� (1) be an electioneering communication, as defined in 11 CFR 100.29; (2) be a public communication that disseminates, distributes, or republishes, in whole or in part, campaign materials prepared by a Federal candidate, the candidate�s authorized committee, or their agents; (3) be a public communication that expressly advocates the election or defeat of a clearly identified candidate for Federal office; or (4) be a public communication that refers to a political party or a clearly identified candidate for Federal office, is publicly distributed or disseminated within 120 days of an election for Federal office, and is directed to voters within the jurisdiction of the clearly identified candidate or to voters in a jurisdiction in which one or more candidates of the political party appear on the ballot.� See 11 CFR 109.21(c)(1)-(c)(4).

In Shays, the court struck down the �content prong� of the coordinated communication test.� The Commission announced its intention to propose changes regarding the non-Internet aspects of the coordinated communication regulations in a separate rulemaking to take place in May 2005, with final rules pending the outcome of the appeal.�

Because of the pending appeal and the upcoming rulemaking on coordinated communications, the Commission is not proposing to revise 11 CFR 109.21 in this rulemaking.� The Commission notes, however, that revising the definition of �public communication� to include certain Internet communications would render such Internet communications subject to the current coordinated communication provisions of section 109.21[22]� The Commission invites comments on this approach.

The Commission�s rule would exempt from the coordinated communication rules advertisements that require payments to outside vendors to create, but that are placed only on the payor�s own website.� This could include a corporation or other prohibited source. �The Commission seeks comment on whether this approach is appropriate, and on whether any other parts of the Commission�s regulations, e.g. those provisions at 11 C.F.R. 114.4 that deal with corporate and labor communications beyond the restricted class, can be interpreted to nonetheless place restrictions on such activity.� The Commission�s rule would also exempt from the coordinated communication rules advertisements that are placed on a prohibited source�s website for free, even though a fee would normally be charged.� Is this an appropriate course? �Do any of the Commission�s other rules already regulate this so that such activity would be prohibited?

B.� Dissemination, Distribution, or Republication on the Internet � 11 CFR 109.21

Under the current Commission regulations, a person makes a contribution by financing �a public communication that disseminates, distributes, or republishes, in whole or in part, campaign materials prepared by a candidate, the candidate�s authorized committee, or an agent of any of the foregoing, unless certain exceptions apply.� 11 CFR 109.21(c)(2).� A candidate�s principal campaign committee need not report the dissemination, distribution, or republication of its campaign materials as an in-kind contribution, however, unless such activity is a �coordinated communication� under 11 CFR 109.21.� See 11 CFR 109.23(a).

�� The Commission notes that changes to the definition of public communication would expand the reach of this regulation to individuals or entities that place announcements for a fee on another individual�s or entity�s website, when the advertisement content otherwise constitutes a republication regulated under 11 C.F.R. 109.21(c)(6).�

The Commission notes that the change to the definition of �public communication� would not affect content placed by an individual on his or her own website, blog, or e-mail.� Because republishing campaign materials on one�s own website, blog, or e-mail would not be a public communication, it would not be a contribution to the candidate under 11 CFR 109.21.� The Commission notes that Senator Russ Feingold, one of BCRA�s sponsors, stated recently that �linking campaign websites, quoting from, or republishing campaign materials and even providing a link for donations to a candidate, if done without compensation, should not cause a blogger to be deemed to have made a contribution to a campaign or trigger reporting requirements.�[23]�� Should the Commission amend 11 CFR 109.21(c)(2) to exempt all dissemination, distribution, or republication of campaign materials on the Internet generally, or keep the reference in the regulation to �public communication�?

C.� Political Party Coordinated Communications � 11 CFR 109.37

The �party coordinated communication� rule at 11 CFR 109.37(a) sets out a three-pronged test for determining whether payments by a political party committee for communications are �coordinated� with a candidate for Federal office, a candidate�s authorized committee, or an agent of either of the foregoing.� This test parallels the three-pronged test in the �coordinated communication� regulations in 11 CFR 109.21.� Therefore, as with the coordinated communication regulation, the proposed change to the definition of �public communication� in 11 CFR 100.26 would expand the scope of communications covered by the party coordinated communication regulation to include certain communications over the Internet.� The Commission seeks comment on this result.

VI.� Other Uses of the Term �Public Communication� in the Commission�s Regulations

The term �public communication� is also used in 11 CFR 106.6 and 300.2.� Thus, any changes to the definition of �public communication� or "general public political advertising" in proposed 11 CFR 100.26 to include certain Internet advertisements would affect the application of these two sections.

A.� Allocation of Expenses Between Federal and Non-Federal Activities by Separate Segregated Funds and Nonconnected Political Committees � 11 CFR 106.6

�� The Commission recently promulgated revisions to its rules on the allocation of certain expenses by SSFs and nonconnected committees.� See 11 CFR 106.6(b)(1), (b)(2), and (f) (2005); Allocation Final Rules, 69 FR 68,056 (Nov. 23, 2004).� These revised regulations require SSFs and nonconnected committees to allocate between their Federal and non-Federal accounts the costs of certain public communications, such as those that refer to a political party and clearly identified Federal and non-Federal candidates.� In addition, the new regulations set forth requirements as to which public communications these committees may pay for using non-Federal funds.��

The effect of the proposed revisions to the definition of �public communication� in 11 CFR 100.26 would require SSFs and nonconnected committees to use Federal funds to pay for some public communications over the Internet.� The Commission invites comment on this result.

B.� Definition of �Agent� � 11 CFR 300.2

BCRA prohibits candidates for State and local offices, and their agents, from using non-Federal funds to pay for any �public communication� that PASOs a candidate for Federal office.� See 2 U.S.C. 441i(f).� Under the Commission�s regulations, an �agent� includes any person who is authorized by a candidate for State or local office to �spend funds for a public communication,� as defined in 11 CFR 100.26.� 11 CFR 300.2(b)(4).� Thus, as a result of the proposed change to the definition of �public communication,� a person would be an agent of a State or local candidate if he or she is authorized by that non-Federal candidate to pay for any Internet communication that is a �public communication� under proposed 11 CFR 100.26.� The Commission invites comments on this result and whether it should consider further changing its proposed definition of �general public political advertising� or �public communication� in 11 CFR 100.26 in light of this result.

VII.�� 11 CFR 100.73 and 100.132 � Exception for news story, commentary, or editorial by the media.

The Commission is also considering whether expressly to to extend the protections of the exception for news stories, commentaries and editorials to media activities that occur on the Internet.� In the Act, Congress exempted from the definition of ~~�contribution� and~~ �expenditure� �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(8)(B)(i) and~~ 431(9)(B)(i).� In enacting the statutory exemption for the media, Congress intended to assure �the unfettered right of the newspapers, television networks, and other media to cover and comment on political campaigns.�� H.R. Rep. No. 93-1239, 93d Congress, 2d Session at 4 (1974) (emphasis added).� The Commission has implemented this statutory exemption in its regulations.� See 11 CFR 100.73 and 100.132.

Many aspects of the contemporary media did not exist, or were not as prevalent, when Congress enacted the statutory exemption in the Act in the 1970s.� In the past, however, the Commission has made clear that the statutory exemption applies to new and emerging forms of mass media, even if they did not exist or were not widespread when Congress passed the Act.� For example, recognizing that cable programming utilized the same aspects of speech and communication of ideas as broadcast stations, the Commission modified its regulations to make clear that the Act�s statutory exemption applied to cable programming.� The Commission noted that �although the cable television industry was much less developed when Congress expressed this intent, it is reasonable to conclude that cable operators, programmers and producers, when operating in their capacity as news producers and distributors, would be precisely the type of �other media� appropriately included within this exemption.�� 61 FR 18,050 (Apr. 24, 1996).� Accordingly, cable programming is included in the Commission�s current regulations implementing the statutory exemption.�� See 11 CFR 100.73 and 100.132.� See also Turner Broadcasting System, v. FEC, 512 U.S. 622 (1994); Medlock v. Leathers, 499 U.S. 439, 444 (1991) (stating that cable television provides news, information, and entertainment and is, in much of its operation, part of the press). �

The Commission is now considering whether to amend its regulations to make clear that the statutory exemption also applies to media activities on the Internet.� Specifically, the Commission is proposing to amend sections 100.73 and 100.132 of its regulations to indicate that any media activities that otherwise would be entitled to the statutory exemption are likewise exempt when they are transmitted over the Internet.� The proposed revisions would still require that the exemption extend only to those entities who are a media entity and who are covering or carrying a news story, commentary, or editorial but would extend the existing exemption to the same activities conducted on the internet by media entities.� In so doing, the Commission recognizes that media operations increasingly take place on the Internet.� The proposed revision would allow for the application of the media exemption to all forms of media activities on the Internet, whether it be through a website, e-mail, or some other form of Internet communication.

The Commission seeks comment on the proposed revisions to its regulatory media exemption for news stories, commentaries, and editorials.� The Commission also seeks comment on whether the proposed revisions are consistent with or required by the statutory language of the Act.� The Commission further seeks comment on the appropriate breadth of the exemption to media activities over the Internet.� Should the exemption be limited to entities who are media entities and who are covering or carrying a news story, commentary, or editorial?� Should the exemption be limited only to the Internet activities of media entities that also have off-line media operations?� The Commission notes that the proposed regulation expressly rejects a policy that only a bona fide press entity with an off-line component is entitled to protection in their on-line news stories, commentaries, and editorials.

The proposed revision would extend the media exemption to media entities whose activities exist solely on-line, without a print or broadcast component, as well as to media entities who have ~~both~~ a broadcast or print component ~~and~~as well as an on-line presence.� For example, Salon.com, Slate.com, and Drudgereport.com~~, Dailynewsonline.com, and Worldnetdaily.com~~ do not publish off-line.� Such on-line sites provide direct access to political news and events and offer commentary on current affairs.� The Commission recognizes that on-line~~such~~ sites are as accessible as printed periodicals or news programs~~distributed to the general publi~~c and therefore proposes to clarify that ~~extend~~ the media exemption extends to those entities who may solely have an on-line presence asnd well as to those entities who have an i~~nternet~~on-line component in addition to their broadcast or print activities.� The Commission seeks comm