[Federal Register Volume 66, Number 192 (Wednesday, October 3, 2001)]
[Proposed Rules]
[Pages 50358-50366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24643]
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FEDERAL ELECTION COMMISSION
11 CFR Parts 100, 114, and 117
[Notice 2001-14]
The Internet and Federal Elections; Candidate-Related Materials
on Web Sites of Individuals, Corporations and Labor Organizations
AGENCY: Federal Election Commission.
ACTION: Notice of Proposed Rulemaking.
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SUMMARY: The Commission is publishing proposed rules relating to the
Internet and Federal elections. These rules address issues raised in a
Notice of Inquiry that was published by the Commission in November of
1999. The proposed rules would clarify the status of campaign-related
Internet activity conducted by individuals, and of hyperlinks and
endorsement press releases on Internet web sites established by
corporations and labor organizations. The draft rules that follow do
not represent a final decision by the Commission on the issues
presented in this rulemaking. Further information is provided in the
supplementary information that follows.
DATES: Comments must be submitted on or before December 3, 2001.
ADDRESSES: All comments should be addressed to Rosemary C. Smith,
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, NW., Washington, DC 20463. Faxed
comments should be sent to (202) 219-3923, with printed copy follow-up
to insure legibility. Electronic mail comments should be sent to
[email protected]. Commenters sending comments by electronic mail
must include their full name, electronic mail address and postal
service address within the text of their comments. Comments that do not
contain the full name, electronic mail address and postal service
address of the commenter will not be considered. The Commission will
make every effort to have public comments posted on its web site within
ten business days of the close of the comment period.
FOR FURTHER INFORMATION CONTACT: Rosemary C. Smith, Assistant General
Counsel, or Paul Sanford, Staff Attorney, 999 E Street, NW.,
[[Page 50359]]
Washington, DC 20463, (202) 694-1650 or (800) 424-9530.
SUPPLEMENTARY INFORMATION: The Commission is publishing this Notice of
Proposed Rulemaking [``NPRM''] to invite comments on proposed rules
that would apply to certain types of campaign-related Internet activity
by individuals, corporations and labor organizations. This NPRM follows
publication of a Notice of Inquiry (``NOI'') on November 5, 1999, in
which the Commission sought comments on a wide range of issues related
to campaign activity conducted on the Internet. 64 FR 60360 (Nov. 5,
1999). After reviewing the comments received in response to the NOI,
the Commission has decided to issue proposed rules in three areas: (1)
Application of the volunteer exemption in 2 U.S.C. 431(8)(B)(ii) to
Internet activity by individuals; (2) Hyperlinks placed on corporate or
labor organization web sites; and (3) Press releases announcing
candidate endorsements that are made available on corporate and labor
organization web sites. The Commission may take additional action on
some or all of the other issues raised in the NOI at a later time.
A. Background
Recent election cycles have seen a dramatic increase in the use of
the Internet to conduct campaign activity related to federal elections.
The use of the Internet for activity relating to federal elections
raises issues regarding the application of the Federal Election
Campaign Act of 1971, as amended, 2 U.S.C. 431 et seq. (``FECA'' or
``the Act'').
Generally, the FECA requires individuals, candidates, party
committees, separate segregated funds (``SSFs'') and nonconnected
committees to file disclosure reports regarding their election-related
activity, and also sets restrictions or limitations on the amounts that
may be contributed to candidates and political committees by
individuals, corporations, labor organizations and other entities.
Although the FECA was enacted prior to widespread use of the Internet,
and has been narrowed by court decisions such as Buckley v. Valeo, 424
U.S. 1 (1976) and FEC v. Massachusetts Citizens for Life, 479 U.S. 238
(1986), several provisions of the Act are broad enough to potentially
encompass some types of campaign-related Internet activity conducted by
individuals, corporations and labor organizations.
For example, the Act's definitions of ``contribution'' and
``expenditure'' are broad enough to potentially apply to some Internet
activity conducted by individuals. Section 431(8) of the Act 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). 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). These definitions have been incorporated
into sections 100.7(a) and 100.8(a) of the Commission's regulations.
The FECA's definition of ``independent expenditure'' is also broad
enough to potentially apply to some individual Internet activity.
Section 431(17) of the Act states that ``the 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.'' 2 U.S.C.
431(17). This definition is incorporated into 11 CFR 109.1.
The FECA is also broad enough to potentially apply to some Internet
activity conducted by corporations and labor organizations. Section
441b of the Act states that ``[i]t is unlawful * * * for any
corporation whatever, or any labor organization, to make a contribution
or expenditure in connection with any election'' for Federal office. 2
U.S.C. 441b(a). Section 441b also contains a separate definition of
``contribution or expenditure'' that applies to corporations and labor
organizations. This definition states that ``the term `contribution or
expenditure' shall include any direct or indirect payment,
distribution, loan, advance, deposit, or gift of money, or any
services, or anything of value * * * to any candidate, campaign
committee, or political party or organization, in connection with'' any
election to any federal office. 2 U.S.C. 441b(b)(2). The definition of
``contribution or expenditure'' applicable to corporations and labor
organizations has been incorporated into section 114.1 of the
Commission's regulations. The prohibition on corporate and labor
organization contributions and expenditures is in 11 CFR 114.2.
The Commission has been called upon to apply these definitions in
several past advisory opinions. However, in applying these rules, the
Commission has also had to determine whether the statutory and
regulatory exceptions to these definitions would place the activity at
issue outside the coverage of the Act. For example, the Act states that
the definition of ``contribution'' applicable to individuals does not
include
The use of real or personal property, including a church or
community room used on a regular basis by members of a community for
noncommercial purposes, * * * 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 or in the church or community room for
candidate-related or political party-related activities * * *.
2 U.S.C. 431(8)(B)(ii). See also 11 CFR 100.7(b)(4), (b)(5) and (b)(6).
The Commission's regulations contain a parallel exception to the
definition of expenditure. Section 100.8(b)(5) states that
(N)o expenditure results where an individual, in the course of
volunteering personal services on his or her residential premises to
any candidate or political committee of a political party, provides
the use of his or her real or personal property to such candidate
for candidate-related activity or to such political committee of a
political party for party-related activity.
11 CFR 100.8(b)(5). See also 11 CFR 100.8(b)(6) and (b)(7). This
provision can also be interpreted as an exception to the definition of
``independent expenditure,'' since that definition incorporates the
term ``expenditure.'' 2 U.S.C. 431(17), 11 CFR 100.16.
Section 441b also contains exceptions that could place some
corporate and labor organization Internet activity outside the scope of
the Act. Section 441b(b)(2) states that the definition of
``contribution or expenditure'' applicable to corporations and labor
organizations does not include, inter alia,
(A) 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;
(and) (B) nonpartisan registration and get-out-the-vote campaigns by
a corporation aimed at its stockholders and executive or
administrative personnel and their families, or by a labor
organization aimed at its members and their families * * *.
2 U.S.C. 441b(b)(2). The Commission has promulgated rules describing
several types of corporate and labor organization activity that are
exempt
[[Page 50360]]
from the prohibition on contributions and expenditures. See 11 CFR
114.3 and 114.4.
The Commission's advisory opinions provide some guidance on the
application of these definitions and their exceptions to campaign
activity conducted on the Internet. However, the scope of these
opinions is limited to the specific factual situations presented. The
Commission initiated this rulemaking in order to provide more
comprehensive guidance to the regulated community on these issues. This
NPRM will focus on the application of the contribution and expenditure
definitions and exceptions described above to Internet campaign
activity conducted by individuals, corporations and labor
organizations.
B. The Notice of Inquiry
The Notice of Inquiry sought comments on a wide range of issues
relating to the use of the Internet for campaign activity. 64 FR 60360
(Nov. 5, 1999). One threshold question raised was whether campaign
activity conducted on the Internet is properly subject to the Act and
the Commission's regulations at all. In addition, the NOI asked
commenters to submit comments on whether Internet campaign activities
are analogous to campaign activities conducted in other contexts, or
are instead so different that they require different rules. The
Commission also asked commenters 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.
More than 1300 commenters submitted comments on the Notice of
Inquiry. The Commission received comment from individuals, state and
national political parties, and from advocacy organizations that focus
on a wide range of public policy issues, such as the First Amendment
and civil rights. The Commission also received comments from advocacy
organizations that focus on Internet and technology issues, including
several devoted to the development of the Internet as a tool for
advancing democracy and for educating the public about political
candidates and issues. Several for-profit Internet ventures submitted
comments, including one major Internet service provider. In addition,
the Commission received comments from national labor organizations, the
publisher of a journal on law and technology, and from several law
firms that represent clients involved in various Internet activities,
including one that represents several candidates and party committees.
These comments are summarized below.
1. General Comments on the NOI
a. Whether To Undertake a Rulemaking
Many of the commenters expressed views on the general question of
whether the Commission should undertake a rulemaking relating to the
use of the Internet for campaign activities. At the time the Notice of
Inquiry was published in November of 1999, some commenters urged the
Commission to refrain from comprehensive rulemaking until after the
2000 election. Other commenters said that the Commission should conduct
further inquiry before issuing new rules and allow ample time for the
major stakeholders to address the issues raised.
The commenters expressed widely differing views on the preferred
scope of the rulemaking. One commenter urged the Commission to adopt a
comprehensive approach to regulation of political activity on the
Internet, rather than issuing guidance piecemeal through advisory
opinions. Another commenter encouraged the Commission to promulgate new
and separate rules governing the use of the Internet that minimize the
requirements placed on web sites and individuals. In contrast, the
third commenter said the Commission should not be drawn into effort to
develop a comprehensive framework for regulating every type of Internet
political activity, because the Commission will not be able to keep up
with fluid and evolving industry standards.
b. Ways in Which the Internet Differs From Traditional Media
Several commenters argued that the Internet differs from
traditional communications media, in support of the assertion that the
assumptions of the campaign finance laws are inapplicable to the newer
medium. According to these commenters, the Internet differs in the
following respects:
(1) The Internet is abundant. There is no ``scarcity,'' i.e., no
limit on the number of communicators, as there is with other media;
(2) The Internet is inexpensive, which allows everyone to
participate. Thus, the traditional models regarding cost upon which the
FECA is based do not apply.
(3) The Internet is interactive and multidirectional. Unlike other
media, Internet users can easily talk back to those who supply Internet
communications.
(4) The Internet is user-controlled, i.e., each user selects the
content with which he or she will come in contact, whereas the FECA
assumes a limited number of people will control the content to which
the end users are exposed.
(5) The Internet is decentralized. There are no gatekeepers, and no
web sites or speakers have any inherent advantage over any other web
sites or speakers. Each one has the same distribution potential; and
(6) The Internet is global. Thus, it provides immediate access, and
would be difficult to regulate.
The commenters asserted that the FECA is based on the traditional mass
media model, where candidates must buy advertisements or rely on news
coverage to reach the public. In contrast, the commenters argue,
candidates advertise directly on the Internet by creating web sites,
thereby avoiding the added cost of buying advertising. One commenter
interpreted the Supreme Court's opinion in Reno v. ACLU, 521 U.S. 844
(1997), to say that the factors permitting government regulation in
other contexts are not present in cyberspace.
A number of nonprofit groups also praised the Internet's ability to
provide efficient, timely information about candidates. These
commenters said that the Internet promotes cleaner, more informed
elections by reducing the importance of money and the need for
fundraising, thereby improving the quality of debate and increasing
competition.
c. General Recommendations for Commission Action
Many of the commenters submitted general recommendations for
Commission action. Hundreds of commenters, for example, stated their
opposition to any regulation of the Internet or any involvement of the
Commission with the Internet. Over 340 commenters stated that the
Commission should generally avoid any regulation of Internet
activities, with many of the commenters explaining that the Internet
cannot or should not be regulated because the medium is a form of
constitutionally-protected speech. Other commenters said that the
Commission should refrain from issuing regulations restricting the
Internet, and instead establish an unambiguous legal framework that
allows maximum freedom to participate in political activity with
minimal government involvement, in order to foster development of the
medium. Many of these commenters said that if the Act is applied to the
Internet, the resulting regulatory burdens will stifle
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participation by individuals and small groups. They also believe that
the regulatory safeguards applicable to traditional media are
unnecessary for the Internet, because the low costs and wide
accessibility of the Internet allow individuals to put forth their
views on a relatively equal basis with the largest traditional
publisher, effectively preventing misuse. Most of these commenters
indicated that web sites run by individuals or small organizations
should be subject to less regulation and scrutiny than campaign-
directed sites or commercial sites run for profit.
One commenter said that the purposes of the FECA would best be
fulfilled by a hands-off approach to regulation of the Internet,
particularly for individuals, volunteers and membership associations.
Another commenter said that regulating political activity on the
Internet could deter individual and grassroots efforts that would
possibly gain visibility only on the web. A third commenter said that
the FEC should take into account the policy underlying the First
Amendment, the FECA and section 230 of the Telecommunications Act of
1996, which the commenter asserted is to promote democratic
institutions by increasing the quantity, diversity, and opportunities
for political speech.
Several commenters cited constitutional considerations in arguing
that the Commission should not regulate political activity on the
Internet. One commenter said that only regulations that address the
compelling state interest in protecting elections from the corrosive
effect of private wealth are justified. This commenter argued that the
low cost of the Internet prevents corruption. Another commenter took a
similar position, and said that regulations would discourage individual
participation in political debate, and would limit much needed
information dissemination. A third commenter urged the Commission to
adopt a presumption that the use of the Internet is not regulated by
the FECA, and narrowly tailor any new rules based on record evidence,
to ensure that they withstand constitutional scrutiny.
Another commenter expressed opposition to the rulemaking unless it
is to establish that Internet activities are fully protected by the
First Amendment, and exempt from reporting requirements and limits.
This commenter urged the Commission to treat all forms of Internet
communication as the modern equivalents of personal correspondence,
pamphlets, newspapers and other forms of political speech, and argued
that nobody that is not already being regulated should come under FEC
jurisdiction because of Internet activity.
However, not all of the commenters were opposed to Commission
regulation of Internet political activity. A number of commenters
expressed concern that in the absence of specifically applicable
regulations, political parties and organizations would use the Internet
to circumvent the FECA or otherwise abuse the freedoms of the medium,
and urged the Commission to promulgate rules explicitly applying the
Act to political activity conducted on the Internet. One commenter said
that the Internet is a means of communication like any other, and
warrants no special exemption from regulation. Another said that
Internet campaign activities are analogous to other campaign activities
and therefore come under the Commission's authority. Two commenters
urged the Commission to treat candidate web sites the same as any other
campaign-related expense, in order to serve the intent of the statute
to level the playing field between incumbents and challengers. Some
commenters drew a distinction between solicited and unsolicited
material, and requested restrictions on ``spam,'' or unsolicited e-mail
and other unsolicited material.
One commenter said that while the Commission should not restrict
First Amendment rights, it likewise should not grant broad permanent
exemptions that would threaten on-line privacy or other compelling
state interests, or that would undermine existing disclosure
requirements. Another commenter said the Commission should apply some
of the current regulations to Internet activity, but should not unduly
limit activity such as hyperlinks, banner ads and other communications.
Instead, this commenter urged the Commission to proceed slowly, and
adopt a flexible regulatory approach. Finally, one commenter recognized
the Commission's interpretive authority, but urged the Commission to
exercise that authority only when it has a high degree of confidence
that the Internet activity being conducted implicates the Act.
C. The Proposed Rules
After reviewing the issues raised and the comments received in
response to the NOI, the Commission has decided to propose rules to
address three issues: (1) Application of the volunteer exemption in 2
U.S.C. 431(8)(B)(ii) to Internet activity by individuals; (2)
Hyperlinks placed on corporate or labor organization web sites; and (3)
Candidate endorsements announced on corporate and labor organization
web sites. The comments received relating to these specific areas are
summarized below, followed by a description of the proposed rules.
1. Internet Activity by Individuals
a. The Notice of Inquiry
The NOI invited comments on how the Act should be applied to web
sites created by individuals that contain references to candidates or
political parties. The Commission has addressed issues relating to
Internet campaign activities by individuals in two past advisory
opinions. Advisory Opinion (''AO'') 1998-22 involved a web site
operated by an individual using a computer jointly owned by the
individual and his wholly-owned limited liability company, or ``LLC.''
Because the individual administered the site himself using existing
equipment, Internet services and domain names, he incurred no
additional costs in operating the site. Nevertheless, the Commission
concluded that if an individual creates a web site that contains
express advocacy of a clearly identified candidate, the costs of the
site are an expenditure under the Act and must be reported if they
exceed $250 in a calendar year. 2 U.S.C. 434(c), 11 CFR 109.2. The
Commission also said that even if the costs of the site are part of the
expenses of maintaining several unrelated sites, they can be
apportioned, so that a portion of the costs can be treated as part of
the independent expenditure. AO 1998-22.
However, in AO 1999-17, the Commission concluded that costs
incurred by a campaign volunteer in preparing a web site on behalf of
candidate on his or her home computer are exempt from the contribution
definition under the volunteer exception in Sec. 100.7(b)(4) of the
regulations. The Commission said that the volunteer exception applies
to ``individuals known to the campaign who, with the campaign's
permission (at some level) engage in volunteer activity.'' Id. The
Commission also said that the costs of electronic mail sent by a
campaign volunteer using his or her own computer equipment would be
covered by the volunteer exception, and thus would not result in a
contribution to the campaign. Id.
The NOI asked whether costs incurred by individuals in posting
candidate-related materials should be covered by the FECA, and if so,
how the value of the individual's contribution or independent
expenditure should be determined? In addition, the NOI asked whether an
individual posting the materials should be required to treat a portion
of the cost of the computer
[[Page 50362]]
hardware, software, or Internet services as part of the contribution or
expenditure. Finally, the NOI sought comments on the extent to which
uncompensated Internet activity by individuals should be covered by the
volunteer exemption.
b. Comments
The Commission received numerous comments on the application of the
Act to web sites created by individuals. Most commenters argued that
costs incurred by individuals engaged in Internet activities should not
be considered contributions or independent expenditures under the FECA.
Many of these commenters thought Internet activity conducted by
individuals should be covered by the volunteer exception. Some
commenters argued that the Internet is easily accessible and that
posting information involves minimal costs. Others claimed that
Internet users must take some affirmative action to view materials on
the Internet. Another group of commenters asserted that the primary
purpose of most politically-oriented Internet activities is to share
ideas and information. For these reasons, they proposed that only sites
directly funded or controlled by a campaign should be treated as
contributions or expenditures.
These commenters generally agreed with the argument that the
volunteer exception should cover web sites created by individuals and
electronic mail transmitted by individuals, and that the volunteer
exception should exempt these activities from the contribution limits
whether or not the individual is working on his or her own, or is
volunteering directly for a campaign. Several commenters criticized AO
1998-22, saying that the opinion was wrongly decided and should be
superseded because it fails to grasp that the Internet is a medium in
which speech is cheap. These commenters expressed the opinion that the
low cost of Internet communication clearly puts individual web sites
within the volunteer exception. Thus, they assert, it is inappropriate
to treat the costs of Internet access as an expenditure. Another
commenter also urged the Commission to vacate AO 1998-22, saying that
individuals should not be required to count all expenses for personal
and home computer equipment towards the FECA thresholds.
Three commenters urged the Commission to relax the disclosure
requirements for individual Internet activity conducted independently
from the candidate. They suggested that the Commission not require an
individual to include a disclaimer or submit disclosure reports unless
the individual's spending exceeds a substantial threshold. One
commenter suggested a threshold of $10,000, while another suggested
$25,000.
In contrast, other commenters argued that the Commission should
apply the contribution and expenditure definitions to Internet activity
consistent with the application of these definitions to other
activities that are not significantly different. A few commenters
suggested that the Commission issue a per se rule that individuals will
not be required to register or report unless their direct out-of-pocket
expenses for express advocacy exceed $250. One commenter suggested that
Internet-related services, such as Internet access, web site creation
and web site maintenance, should be treated as in-kind contributions,
but only when they are provided directly to candidates and political
campaigns.
Several commenters submitted comments on the types of individual
expenses that should be considered contributions or expenditures for
purposes of the Act. Two commenters expressed the opinion that the cost
of a computer and other electronic media should not be considered
contributions or expenditures unless there is evidence that the
individual is working with a candidate or has purchased equipment for
the sole purpose of supporting a candidate. Two other commenters urged
the Commission not to include allocated ``sunk'' costs, i.e., costs
that have already been incurred and cannot be recovered, unless they
were incurred principally to support or oppose candidates. Similarly,
several commenters argued that only the incremental costs incurred
while engaging in Internet political activity should be counted towards
an individual's expenditure reporting threshold.
c. Proposed 11 CFR 117.1
To clarify the application of the Act to campaign-related Internet
activity by individuals, the Commission is proposing to add new
Sec. 117.1, which would describe certain types of individual Internet
activities that would not be treated as contributions or expenditures.
Section 117.1(a) would contain an exception from the definition of
``contribution'' in Sec. 100.7(a) of the current regulations. Section
117.1(b) would contain a parallel exception from the expenditure
definitions in Secs. 100.8(a) and 109.1.
Proposed Secs. 117.1(a) and (b) would state that no contribution or
expenditure results where an individual, without receiving
compensation, uses computer equipment, software, Internet services or
Internet domain name(s) that he or she personally owns to engage in
Internet activity for the purpose of influencing any election to
Federal office. These exceptions would apply whether or not the
individual's activities are known to or coordinated with any candidate,
authorized committee or party committee. See 11 CFR 100.23. In
addition, Internet services personally owned by an individual would
include Internet access and web hosting services provided by an
Internet service provider (``ISP''), if these services are provided to
the individual pursuant to an agreement between the ISP and the
individual acting in his or her individual capacity. The individual's
use of servers, storage devices and other equipment owned by the ISP
pursuant to such a service agreement would also be covered by the
exception, regardless of where that equipment is physically located.
However, the proposed exceptions would not apply to equipment,
services or software owned by an individual's employer, even if the
individual was using them as part of volunteer activity conducted on
his or her own time. (Note, however, that if the use of a corporation's
or labor organization's computer facilities is ``occasional, isolated
or incidental'' under 11 CFR 114.9(a) or (b), no contribution or
expenditure would result, so long as the individual reimburses the
corporation or labor organization for any associated increase in
overhead or operating costs.)
The effect of the proposed contribution and expenditure exceptions
would be that individuals would be able to engage in a significant
amount of election-related Internet activity without being subject to
the Act. The costs incurred in activities that fall within the
contribution exception would not count toward the limits on individual
contributions to candidates and party committees. Furthermore, the
costs of activities that fall within the expenditure exception would
not be independent expenditures under 11 CFR 100.16 and 109.1. As a
result, individuals would not be required to disclose these costs when
they exceed $250 in a calendar year, 2 U.S.C. 434(c), nor would they be
required to include disclaimer statements, 2 U.S.C. 441d. See 11 CFR
109.2, 109.3 and 110.11.
The status of costs that are not covered by these exceptions would
depend, among other things, on whether the costs at issue would
constitute a ``contribution'' or ``expenditure'' under the FECA, and
whether the individual that incurs the costs coordinates his or her
activity with a candidate, authorized
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committee or party committee, or instead conducts the activity
independently. 11 CFR 100.16 and 100.23. Coordinated expenditures that
are not covered by the contribution exception would be in-kind
contributions subject to the individual contribution limits, and
independent expenditures that are not covered by the expenditure
exception would be subject to the $250 reporting threshold in 2 U.S.C.
434(c). See also 11 CFR 109.2, AO 1998-22. The Commission invites
comments on the exceptions from the contribution and expenditure
definitions in proposed sections 117(a) and (b).
2. Hyperlinks on Corporation and Labor Organization Web Sites
a. The Notice of Inquiry
Many corporations and labor organizations operate web sites to
communicate with their restricted class and the general public. As
explained above, 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 web sites that are available to the general
public to assist or advocate on behalf of any federal candidate.
The Notice of Inquiry sought comments on the circumstances under
which a candidate-related or election-related hyperlink on a corporate
or labor organization web site should be treated as a prohibited
contribution or independent expenditure. The NOI observed that a
hyperlink on a corporate or labor organization's web site may be
something of value to the linked candidate, political committee or
political party, since the link will inevitably steer visitors from the
corporation or labor organization's site to the linked site. In AO
1999-17, the Commission concluded that a hyperlink to a candidate or
committee's web site is a contribution under the Act if those providing
the link do so at less than the amount that they would usually charge
for the link. Thus, if a corporation or labor organization provides a
free hyperlink to a candidate or committee's web site when it would
ordinarily charge for the link, this could be viewed as a contribution
or expenditure under the Act.
On the other hand, the costs of providing the link are often
negligible or nonexistent, and the practice in some areas of the
Internet industry may be to charge nothing for these links. Thus, the
usual and normal charge for providing a link may be zero. The NOI
sought comments on whether, in light of these considerations, a
hyperlink on a corporate or labor organization web site should be
considered a contribution or expenditure.
b. Comments
One commenter argued that, under the Supreme Court's decision in
Reno v. ACLU, 521 U.S. 844 (1997), Internet communications are not
communications with the general public, and thus, the prohibition on
corporate and labor organization expenditures would not apply. See 11
CFR 114.2(a). However, most of the comments implicitly or explicitly
assumed that Internet communications are communications with the
general public for purposes of the Act. The Commission recently
approved final rules that treat Internet communications as ``general
public political communication'' for purposes of the contribution
limits in section 441a. 11 CFR 100.23(e)(1). See also 66 FR 23537 (May
9, 2001).6
On the general question of whether corporate and labor organization
Internet communications should be treated as contributions or
expenditures, several commenters took the position that the existing
regulations generally applicable to corporation and labor organization
activity should also apply to Internet political activity by these
entities. Thus, these commenters believe that web sites owned,
maintained or operated by a corporation or a labor organization should
be forbidden from advocating for or assisting a candidate. One
commenter specifically argued that the actions of corporations and
labor organizations should be more strictly regulated than the
activities of individuals.
In contrast, one commenter asserted that the Commission should
mirror the volunteer exemption that applies to individuals for
corporations, and rule that most corporate political speech on the
Internet is not ``something of value'' that can be considered a
contribution subject to regulation under the FECA.
Two commenters went further, arguing that section 441b does not
apply to corporate and labor organization communications on the
Internet. These commenters assert that section 441b only prohibits
corporations and labor organizations from making contributions of
``anything of value'' in connection with a federal election. Thus, in
their view, section 441b only prohibits communications entailing a
measurable monetary sum. These commenters claimed that Internet
communications generally do not involve substantial costs.
Consequently, they reasoned, section 441b does not apply to Internet
communications. These two commenters also urged the Commission to
consider the requirements of the FECA satisfied if express advocacy on
a labor organization web site includes the proper disclaimer.
Some of the comments submitted regarding hyperlinks on individual
web sites were also relevant to hyperlinks on web sites operated by
corporations and labor organizations. Thirty commenters argued that
hyperlinks are merely pointers that present an option for a viewer, but
do not add value to a site or advocate the contents of the target site.
Nineteen commenters suggested that hyperlink restrictions could reduce
the value of the entire Internet. Eighteen commenters took the position
that regulation is unnecessary because hyperlinks cost next to nothing
to create. Ten commenters opposed hyperlink regulations because they
believe hyperlink regulations would be difficult to enforce. Several
commenters recommended that a hyperlink be treated as a contribution
only in specific circumstances, such as when it is presented in a
fraudulent or misleading manner or when it is provided without charge
when a charge would normally be assessed for similar services.
Other commenters urged the Commission to treat hyperlinks like
footnotes, endnotes, numbers in a phone book, maps or signs offering
directions to campaign headquarters, providing a friend or caller with
a phone number, or the mere provision of information or a path to
information, much like providing someone with a telephone number or an
address. These commenters argued that links should not be treated as an
implied endorsement, because the user must take proactive steps to
pursue further information. Two commenters characterized hyperlinks as
the backbone of the web, and argued that treating them as contributions
or something of value will discourage web site operators from linking
to official candidate sites. Another commenter characterized hyperlinks
as part of the Internet infrastructure.
Other commenters expressed similar views. One commenter asserted
that the mere establishment of hyperlinks, even if coordinated, should
not be regulated. Another commenter argued that if a hyperlink is
placed on a site without any attempt to distinguish candidates or their
political affiliation, the link should be treated as nonpartisan voter
drive activity under section 431(9)(B)(ii) of the FECA, regardless of
the type of web site on which it is posted. A third
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commenter took the position that a link cannot be treated as a
contribution or expenditure because it does not contain substantive
content. The commenter argued that hyperlinks may facilitate access to
communication that contains express advocacy, but they cannot
themselves be a communication containing express advocacy.
One commenter said the standard of ``usually charged for'' cited in
AO 1999-17 is inadequate, because some web sites have both paid and
unpaid links. This commenter urged the Commission to specifically state
that hyperlinks are not ``something of value,'' and only treat a link
as a contribution when (1) the web site routinely charges for similar
links, (2) the web site has provided the particular links in a partisan
manner, and (3) the text of or content around the link contains express
advocacy. Another commenter urged the Commission to use categories to
apply the ``less than usual and normal charge'' standard. Under this
approach, a link to a particular candidate's web site would not be a
contribution to that candidate unless the site charges less than it
would for links to another candidate's web sites.
Other commenters favored less regulation of hyperlinks. One
commenter suggested that the Commission establish a presumption that a
hyperlink is not a contribution absent facts to the contrary. Under
this approach, if a web site provided a link for which it would
normally charge a fee, the Commission would treat this as one factor
tending to rebut the presumption that the link is not a contribution.
Another commenter took a more absolute position, saying that there is
no definitive way to determine the value of a hyperlink. Consequently,
this commenter believes, they should not be regulated on any type of
web sites.
c. Proposed 11 CFR 117.2
The Commission is proposing to add provisions to the regulations
that would address the placement of hyperlinks on corporate and labor
organization web sites. New Sec. 117.2 would state that the
establishment and maintenance of a hyperlink from the web site of a
corporation or labor organization to the web site of a candidate or
party committee for no charge or for a nominal charge would not be a
contribution or expenditure, even if the corporation or labor
organization selectively provides hyperlinks to one or more
candidate(s), political committee(s), or political parties without
providing hyperlinks to any opposing candidate(s), political
committee(s) or political parties.
However, three conditions must be met in order for the hyperlink to
be exempt from the contribution and expenditure definitions. First, the
hyperlink will only be exempt if the corporation or labor organization
does not charge or charges only a nominal amount for providing
hyperlinks to other organizations. Second, the hyperlink may not be a
coordinated general public political communication under Sec. 100.23 of
the Commission's rules. Finally, if the hyperlink is anchored to an
image or graphic material, that material may not expressly advocate
under Sec. 100.22. Similarly, the text surrounding the hyperlink on the
corporation or labor organization's web site may not expressly
advocate. However, if the hyperlink is anchored to the text of the URL
of a candidate or party committee's web site, the text of the URL is
not subject to the express advocacy limitation. Thus, even if the text
of the URL itself expressly advocates, the hyperlink would be exempt,
so long as the other conditions are met. The Commission invites
comments on proposed Sec. 117.2.
3. Press Releases Announcing Candidate Endorsements
a. The Notice of Inquiry
Under section 114.4(c) of the current regulations, corporations and
labor organizations may distribute certain candidate-related and
election-related materials to the general public without violating
section 441b of the FECA. Under paragraph (c)(6) of Sec. 114.4, a
corporation or labor organization may endorse a candidate, and may also
publicly announce the endorsement and state the reasons therefore
through a press release and press conference, so long as disbursements
for the press release and press conference are de minimis. The
corporation or labor organization's disbursements will be considered de
minimis if 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).
In AO 1997-16, the Commission applied this exception to 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, and thus would be
a prohibited corporate expenditure under 2 U.S.C. 441b(b)(2)(A) and 11
CFR 114.4. However, the Commission said that an endorsement could be
posted on a corporation or labor organization's web site if access to
the endorsement were limited to the restricted class using a password
or similar method, or if the corporation or labor organization's
separate segregated fund paid the costs of posting the endorsement.
The NOI sought comments on whether a corporation or labor
organization that routinely posts press releases on the Internet should
be allowed to post a press release announcing a candidate endorsement
on a portion of its site that is accessible to the general public, or
should be required to limit access to members of the restricted class.
b. Comments
Several commenters addressed the subject of endorsements on
corporate and labor organization web sites. One commenter argued that
corporations that routinely post press releases on their own web sites
should be allowed to post endorsements. Another commenter took the
position that posting a press release should be allowed provided the
press release is used in a similar way to any other press release. This
commenter reasoned that if other press releases are generally available
to the public, endorsement press releases should also be accessible to
the general public. Another commenter suggested that corporations and
labor organizations should be allowed to post candidate endorsement
press releases on their web sites so long as they make no special
effort to direct web traffic to the endorsement portion of their sites.
This commenter also urged the Commission to supersede AO 1997-16.
In contrast, two commenters suggested that corporations and labor
organizations be required to place endorsement press releases in a
discrete ``media only'' area of their web sites designated solely for
media communications. These commenters said this area could be a deep
link page, to limit exposure. However, under these circumstances, the
commenters argued, corporations and labor organizations should be
allowed to place candidate endorsements on their web sites, since this
reflects the way they communicate with the news media in the Internet
age.
c. Proposed 11 CFR 117.3
The Commission proposes to add Sec. 117.3 to new part 117 to
address the issue of endorsement press releases on corporate and labor
organization web sites. Proposed Sec. 117.3 would state that,
[[Page 50365]]
for the purposes of the provisions governing endorsements in
Sec. 114.4(c)(6) of the current regulations, a corporation or labor
organization may make a press release announcing a candidate
endorsement available to the general public on its web site, provided
that four conditions are met: (1) The corporation or labor organization
ordinarily makes press releases available to the general public on its
web site; (2) The press release is limited to an announcement of the
corporation or labor organization's endorsement or pending endorsement
and a statement of the reasons therefore; (3) The press release is made
available in the same manner as other press releases made available on
the web site; and (4) The costs of making the press release available
on the web site are de minimis.
This provision would enable a corporation or labor organization to
post a press release announcing a candidate endorsement on its web site
without limiting access to the press release to its restricted class.
Thus, Sec. 117.3 would partially supersede AO 1997-16. However, the
corporation or labor organization would be required to limit the press
release to an announcement of the corporation or labor organization's
endorsement and a statement of the reasons for the endorsement. Section
117.3 would not allow the corporation or labor organization to post
express advocacy materials such as banner advertisements for a
candidate on its web site. The Commission invites comments on this
proposal.
Certification of No Effect Pursuant to 5 U.S.C. 605(b) (Regulatory
Flexibility Act)
I certify that the attached proposed rules, if promulgated, would
not have a significant economic impact on a substantial number of small
entities. The basis of this certification is that the proposed rules
are permissive in nature, in that they allow individuals, corporations
and labor organizations to engage in activity that might otherwise be
limited or prohibited under the FECA. Therefore, the rules would impose
no economic burdens on these entities.
List of Subjects
11 CFR Part 100
Elections.
11 CFR Part 114
Business and Industry, Elections, Labor.
11 CFR Part 117
Elections, Internet.
For the reasons set forth in the preamble, the Federal Election
Commission proposes to amend Subchapter A of Chapter I of Title 11 of
the Code of Federal Regulations as follows:
PART 100--SCOPE AND DEFINITIONS (2 U.S.C. 431)
1. The authority citation for part 100 would continue to read as
follows:
Authority: 2 U.S.C. 431, 434(a)(11), 438(a)(8).
2. Section 100.7 would be amended by adding a new sentence at the
end of paragraph (b)(4) to read as follows:
Sec. 100.7 Contribution (2 U.S.C. 431(8)).
* * * * *
(b) * * *
(4) * * * See 11 CFR 117.1 for rules governing an individual's use
of computer equipment, software, Internet services or Internet domain
name(s) that he or she personally owns to engage in Internet activity
in support of or in opposition to any candidate or any political
committee of a political party.
* * * * *
3. Section 100.8 would be amended by adding a new sentence at the
end of paragraph (b)(5), to read as follows:
Sec. 100.8 Expenditure (2 U.S.C. 431(9)).
* * * * *
(b) * * *
(5) * * * See 11 CFR 117.1 for rules governing an individual's use
of computer equipment, software, Internet services or Internet domain
name(s) that he or she personally owns to engage in Internet activity
in support of or in opposition to any candidate or any political
committee of a political party.
* * * * *
PART 114--CORPORATE AND LABOR ORGANIZATION ACTIVITY
4. The authority citation for part 114 would continue to read as
follows:
Authority: 2 U.S.C. 431(8)(B), 431(9)(B), 432, 434(a)(11),
437d(a)(8), 438(a)(8) and 441b.
5. Section 114.1 would be amended by adding new paragraph
(a)(2)(iv) to read as follows:
Sec. 114.1 Definitions.
(a) * * *
(2) * * *
(iv) The establishment and maintenance of a hyperlink under the
conditions described in section 117.2 of this chapter;
* * * * *
6. Section 114.4 would be amended by adding a new sentence at the
end of paragraph (c)(6)(i) to read as follows:
Sec. 114.4 Disbursements for communications beyond the restricted
class in connection with a Federal election.
* * * * *
(c) * * *
(6) * * *
(i) * * * The press release may be made available through the
corporation's or labor organization's web site under the conditions
described in section 117.3 of this chapter.
* * * * *
7. Part 117 would be added to read as follows:
PART 117--USE OF THE INTERNET FOR CAMPAIGN ACTIVITY
Sec.
117.1 Individual volunteer activity that is not a contribution or
expenditure.
117.2 Hyperlinks from corporation or labor organization web sites.
117.3 Corporate and labor organization endorsement press releases
beyond the restricted class in connection with a federal election.
Authority: 2 U.S.C. 431(8), 431(9), 437d(a)(8), 438(a)(8) and
441b.
Sec. 117.1 Individual volunteer activity that is not a contribution or
expenditure.
(a) Contribution. Notwithstanding the provisions of Sec. 100.7(a)
of this chapter, no contribution results where an individual, without
receiving compensation, uses computer equipment, software, Internet
services or Internet domain name(s) that he or she personally owns to
engage in Internet activity for the purpose of influencing any election
for Federal office, whether or not the individual's activities are
known to or coordinated with any candidate, authorized committee or
party committee.
(b) Expenditure. Notwithstanding the provisions of Secs. 100.8(a)
and 109.1 of this chapter, no expenditure results where an individual,
without receiving compensation, uses computer equipment, software,
Internet services or Internet domain name(s) that he or she personally
owns to engage in Internet activity for the purpose of influencing any
election for Federal office, whether or not the individual's activities
are known to or coordinated with any candidate, authorized committee or
party committee.
Sec. 117.2 Hyperlinks from corporation or labor organization web
sites.
(a) Notwithstanding the provisions of Sec. 114.1(a) of this
chapter, the establishment and maintenance of a hyperlink from the web
site of a
[[Page 50366]]
corporation or labor organization to the web site of a candidate,
political committee or party committee for no charge or for a nominal
charge is not a contribution or expenditure, provided that:
(1) The corporation or labor organization does not charge or
charges only a nominal amount for providing hyperlinks to other
organizations;
(2) The hyperlink is not coordinated general public political
communications under Sec. 100.23 of this chapter; and
(3) The following materials do not expressly advocate under
Sec. 100.22 of this chapter:
(i) The image or graphic material to which the hyperlink is
anchored; and
(ii) The text surrounding the hyperlink on the corporation or labor
organization's web site, other than the text of a Uniform Resource
Locator to which the link is anchored.
(b) The exception in paragraph (a)(1) of this section applies even
if the corporation or labor organization selectively provides
hyperlinks to one or more candidate(s), political committee(s), or
political parties without providing hyperlinks to any opposing
candidate(s), political committee(s) or political parties.
Sec. 117.3 Corporate and labor organization endorsement press
releases.
For the purposes of Sec. 114.4(c)(6) of this chapter, a corporation
or labor organization may make a press release announcing a candidate
endorsement available to the general public on its web site, provided
that:
(a) The corporation or labor organization ordinarily makes press
releases available to the general public on its web site;
(b) The press release is limited to an announcement of the
corporation's or labor organization's endorsement or pending
endorsement and a statement of the reasons therefore;
(c) The press release is made available in the same manner as other
press releases made available on the web site; and
(d) The costs of making the press release available on the web site
are de minimis.
Dated: September 27, 2001.
Danny L. McDonald,
Chairman, Federal Election Commission.
[FR Doc. 01-24643 Filed 10-2-01; 8:45 am]
BILLING CODE 6715-01-P