[Federal Register Volume 70, Number 63 (Monday, April 4, 2005)]
[Proposed Rules]
[Pages 16967-16979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-6521]


=======================================================================
-----------------------------------------------------------------------

FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 110 and 114

[Notice 2005-10]


Internet Communications

AGENCY: Federal Election Commission.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Federal Election Commission requests comments on proposed 
changes to its rules that would include paid advertisements on the 
Internet in the definition of ``public communication.'' These changes 
to the Commission's rules 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 June 3, 2005. The 
Commission will hold a hearing on the proposed rules on June 28-29, 
2005 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 
[email protected] or submitted through the Federal eRegulations Portal 
at http://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 [email protected]. If the 
electronic

[[Page 16968]]

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, NW., Washington, DC 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 Web site after the comment period ends. The hearing 
will be held in the Commission's ninth floor meeting room, 999 E 
Street, NW., Washington, DC.

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, NW., Washington, DC 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).
---------------------------------------------------------------------------

    \1\ ``Federal funds'' are funds subject to the limitations, 
prohibitions, and reporting requirements of the Act. See 11 CFR 
300.2(g). ``Non-Federal funds'' are funds not subject to the 
limitations and prohibitions of the Act. See 11 CFR 300.2(k).
    \2\ There are four types of ``Federal election activity'': Type 
1--Voter registration activity during the period that begins on the 
date that is 120 days before a regularly scheduled Federal election 
is held and ends on the date of the election; Type 2--Voter 
identification, get-out-the-vote activity, or generic campaign 
activity conducted in connection with an election in which a 
candidate for Federal office appears on the ballot; Type 3--A public 
communication that promotes, supports, attacks or opposes a clearly 
identified candidate for Federal office; and Type 4--Services 
provided during any month by an employee of a state, district, or 
local committee of a political party who spends more than 25 percent 
of that individual's compensated time during that month on 
activities in connection with a Federal election. See 2 U.S.C. 
431(20) and 11 CFR 100.24.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \3\ Levin funds are a type of non-Federal funds created by BCRA 
that may be raised and spent by state, district, and local party 
committees and organizations to pay for the allocable portion of 
Types 1 and 2 Federal election activity. See 2 U.S.C. 441i(b)(2)(A) 
and (B); 11 CFR 300.2(i), 300.32(b). These funds may include 
donations from some sources ordinarily prohibited by Federal law 
(e.g., corporations, labor organizations and Federal contractors) to 
the extent permitted by state law, but are limited to $10,000 per 
calendar year from any source or to the limits set by State law--
whichever limit is lower. See 11 CFR 300.31.
---------------------------------------------------------------------------

    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 (DC 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.
---------------------------------------------------------------------------

    \4\ The court found that this rule did not satisfy step one of 
the test set out by the Supreme Court in Chevron, U.S.A., Inc. v. 
National Res. Def. Council, 467 U.S. 837 (1984) (``Chevron''). The 
Shays court stated that, in the alternative, the regulatory 
definition of ``public communication'' as applied to the ``content 
prong'' of the coordinated communication regulations in 11 CFR 
109.21(c) is inconsistent with the Act and, therefore, provides an 
independent basis for invalidation under step two of the Chevron 
test. See Shays at 70-71.
---------------------------------------------------------------------------

    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; see also Notice of Proposed Rulemaking on Prohibited and 
Excessive Contributions; Non-Federal Funds or Soft Money, 67 FR 35,654, 
35,675 (May 20, 2002).

[[Page 16969]]

    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 Web site, 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 Web sites 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 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 
computers, software, and other Internet equipment and 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 (``PASOs'') 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.

[[Page 16970]]

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\
---------------------------------------------------------------------------

    \5\ See Enrique Armijo, Public Airwaves, Private Mergers: 
Analyzing the FCC's Faulty Justification for the 2003 Media 
Ownership Rule Change, N.C. L. Rev. 1482, 1494 (May 2004) 
(discussing broadcast media and the Internet as ``imperfect 
substitutes''); see also Ryan Z. Watts, Independent Expenditures on 
the Internet: Federal Election Law and Political Speech on the World 
Wide Web, 8 CommLaw Conspectus 149, 160 (Winter 2000) (discussing 
Reno v. ACLU, 521 U.S. 844 (1997) and the Internet's differences 
from traditional media).
    \6\ See Edward L. Carter, Esq., Outlaw Speech on the Internet: 
Examining the Link Between Unique Characteristics of Online Media 
and Criminal Libel Prosecutions, 21 Santa Clara Computer & High 
Tech. L.J. 289, 316-17 (January 2005) (``Internet is unlike 
traditional print or broadcast media in that messages can have a 
long shelf life--an Internet message can circulate via e-mail or 
remain posted somewhere even long after the message's creator has 
tried to retract it.'').
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \7\ See Internet World Stats available at http://www.internetworldstats.com/stats2.htm (last visited 3/7/2005).
    \8\ See Pew Internet & American Life Project, Trends 2005, 
Chapter 4, Internet: The Mainstreaming of Online Life, p. 58 (2005) 
available at http://www.pewinternet.org/pdfs/Internet_Status_2005.pdf (last visited 3/7/2005).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \9\ See Pew Internet & American Life Project and the University 
of Michigan School of Information, The Internet and the Democratic 
Debate, p. 2 (October 27, 2004) available at http://www.pewinternet.org/pdfs/PIP_Political_Info_Report.pdf (last 
visited 3/7/2005).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \10\ See PriceWatherhouseCoopers and Interactive Advertising 
Bureau, IAB Internet Advertising Revenue Report (April 2004 and 
September 2004), available at http://www.iab.net/recources/ad_revenue.asp (last visited 3/7/2005).
---------------------------------------------------------------------------

    The 2004 election cycle marked a dramatic shift in the scope and 
manner in which citizens used Web sites, 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\
---------------------------------------------------------------------------

    \11\ The word ``blog'' derives from the term ``Web log'' and is 
defined as ``a Web site that contains an online personal journal 
with reflections, comments and often hyperlinks provided by the 
writer.'' http://www.merriam-webster.com (last visited 3/7/2005). 
People who maintain blogs are known as ``bloggers.''
    \12\ A ``listserv'' is a software program that automatically 
sends electronic mail messages to multiple e-mail addresses on an 
electronic mailing list. See, e.g., http://www.lsoft.com/products/listserv.asp (last visited 3/7/2005). The term ``listserv'' is 
commonly used, however, to denote the electronic mailing list itself 
or the automated forwarding to all addresses on the mailing list of 
an e-mail sent only to the listserv's e-mail address.
    \13\ See Pew Internet & American Life Project, The Internet and 
Campaign 2004, available at http://www.pewinternet.org/pdfs/PIP_2004_Campaign.pdf (last visited 3/17/2005).
    \14\ See note 9, above, The Internet and Democratic Debate, p. 
2. During the same time period, the number of people reporting 
television as their primary source of campaign information declined. 
Id.
    \15\ See Jessica Mintz, When Bloggers Make News--As Their Count 
Increases, Web Diarists Are Asking: Just What Are the Rules? Wall 
St. J., Jan. 21, 2005 at B1.
    \16\ See note 8, above, The Mainstreaming of Online Life, p. 2.
---------------------------------------------------------------------------

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 person's or entity's Web 
site. Such advertisements could take the form, for example, of 
streaming video that appears in banner advertisements \17\ or ``pop-
up'' advertisements.\18\
---------------------------------------------------------------------------

    \17\ ``Banner advertisements'' are advertisements on a Web page 
that convey messages in text, animated graphics, and sound. They 
traditionally appear in rectangular shape, but may take any shape. 
Typically, banner advertisements are linked to the advertiser's Web 
site, which enables a viewer to ``click through'' the advertisement 
to view the advertiser's Web site for further information on the 
product or service advertised. See http://www.netlingo.com/lookup.cfm?term=ad+banner (last visited 3/7/2005).
    \18\ ``Pop-up'' advertisements usually appear in a separate 
browser window from the one being viewed. The advertisements are 
superimposed over the window being viewed, and require the viewer to 
take some action, such as closing the window in which the pop-up 
advertisement appears, to continue viewing the underlying browser 
window. See http://www.netlingo.com/lookup.cfm?term=pop%2Dup%20ad 
(last visited 3/7/2005). Although pop-up advertisements technically 
are not part of the underlying Web site or account, the Commission 
seeks comment on whether they should be considered to be ``placed 
on'' the Web site for purposes of this rulemaking.
---------------------------------------------------------------------------

    The Commission invites comment on whether announcements placed for 
a fee on another entity's Web site 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

[[Page 16971]]

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 the advertising space is provided in exchange for 
something of value other than a monetary payment, for example through 
an exchange of comparable advertising? Although the Commission's 
proposed rule would exclude Internet 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 Web sites 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 ``public 
communication'' in 11 CFR 100.26 was promulgated to permit state, 
district, and local committees to make references to their Federal 
candidates on the committees' official Web sites 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 Web sites, while requiring that state, district, 
and local party committees use exclusively Federal dollars to place 
advertisements that PASO a Federal candidate on another individual's or 
entity's Web site. State, district, and local committee Web sites would 
still have to 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.''
    The Commission also seeks comment on the consequences of 
alternative approaches. For example, if a mere PASO reference to a 
Federal candidate on a State, district, or local committee's Web site 
were to constitute a public communication, does that require that the 
entire Web site be paid for with hard dollars? If not, the Commission 
seeks comment on how to allocate that portion of the Web site that must 
be paid for with hard dollars--for example, based on the time and space 
of the Web site 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 Web site, 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 PASOs a 
Federal candidate that is exclusively placed on the party's Web site 
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.'' 2 U.S.C. 431(21). 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

[[Page 16972]]

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, 521 U.S. 
at 870 (``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 Web sites 
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).\19\ 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.
---------------------------------------------------------------------------

    \19\ Electioneering communications also require a disclaimer. 
See 11 CFR 110.11(a)(4).
---------------------------------------------------------------------------

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 
Web sites of political committees available to the general public.'' 11 
CFR 110.11(a). Thus, political committees must include disclaimers on 
their Web sites 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 proposed 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 Web site 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 Web sites provided 
that they are ``available to the general public.''
    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.\20\ For example, the operator 
of the ninth most ``linked'' blog on the Internet, which

[[Page 16973]]

received as many as one million visits daily, reportedly received 
$12,000 over a four-month period from one presidential candidate.\21\ 
The news reports further indicate that not all of the bloggers 
disclosed the payments to the blogs' readers.
---------------------------------------------------------------------------

    \20\ See, e.g., William M. Bulkely and James Bandler, Dean 
Campaign Made Payments to Two Bloggers, Wall St. J., Jan. 14, 2005 
at B2; Charles Babington and Brian Faler, A Committee Post and a 
Pledge Drive---Bloggers on the Payroll, Wash. Post, Dec. 17, 2004, 
at A16.
    \21\ See William M. Bulkely and James Bandler, Dean Campaign 
Made Payments to Two Bloggers, Wall St. J., Jan. 14, 2005 at B2.
---------------------------------------------------------------------------

    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. Could or should bloggers be required to disclose such 
payments? Could or 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 section 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).\22\ 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).
---------------------------------------------------------------------------

    \22\ The other two prongs of the coordinated communication test 
are (1) whether someone other than the candidate, the candidate's 
authorized committee, a political party committee, or any of their 
agents paid for the communication in question; and (2) whether the 
communication satisfies the ``conduct prong'' of 11 CFR 109.21(d).
---------------------------------------------------------------------------

    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 later this year, with final rules pending the outcome of the 
Commission's appeal of certain aspects of the Shays decision.
    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.\23\ The Commission invites comments on this approach.
---------------------------------------------------------------------------

    \23\ In addition to its use in connection with the ``content 
prong,'' the term ``public communication'' is used in connection 
with the ``conduct prong'' of the coordinated communication 
regulations involving the use of a ``common vendor.'' See 11 CFR 
109.21(d)(4)(ii)(E) and (F).
---------------------------------------------------------------------------

    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 Web 
site. 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 CFR 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 Web site 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 the proposed 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 Web site, when the advertisement content 
otherwise constitutes a republication regulated under 11 CFR. 
109.21(d)(6).
    The Commission notes that the proposed change to the definition of 
``public communication'' would not affect content placed by an 
individual on his or her own Web site, blog, or e-mail. Because 
republishing campaign materials on one's own Web site, 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 Web sites, 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.''\24\ 
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''?
---------------------------------------------------------------------------

    \24\ Senator Russ Feingold, ``Blogs Don't Need Big Government'' 
available at http://mydd.com/story/2005/3/10/112323/534 (last 
visited 3/17/2005).

---------------------------------------------------------------------------

[[Page 16974]]

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); Final Rules on Political 
Committee Status, Definition of Contribution, and Allocation for 
Separate Segregated Funds and Nonconnected Committees, 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 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 ``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(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.'' Final Rules on Candidate Debates and News 
Stories, 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. FCC, 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. 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 Web 
site, 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

[[Page 16975]]

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 a broadcast 
or print component as well as an on-line presence. For example, 
Salon.com, Slate.com, and Drudgereport.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 sites are as accessible as printed periodicals or news programs 
and therefore proposes to clarify that the media exemption extends to 
those entities who may solely have an on-line presence as well as to 
those entities who have an on-line component in addition to their 
broadcast or print activities. The Commission seeks comment on this 
approach. The Commission notes that it has applied the media exemption 
on a case-by-case basis in a wide variety of contexts. See AOs 2004-7, 
2003-34, 2000-13, 1996-48, 1996-41, 1996-16, 1992-26, 1988-22, 1987-08, 
1982-44, 1982-58, 1980-90, 1980-109, and 1978-76.
    The Commission also seeks comment on whether bloggers, whether 
acting as individuals or through incorporated or unincorporated 
entities, are entitled to the statutory exemption. Can on-line blogs be 
treated as ``periodical publications'' within the meaning of the 
exemption? See 2 U.S.C. 431(9)(B)(i). If not, why not? Is the media 
exemption to be limited to traditional business models, meaning 
entities that finance operations with subscriptions or advertising 
revenue? The Commission also seeks comment on whether on-line forums 
qualify for the exemption.
    The Commission further seeks comment on whether it makes any 
difference under the Act if a blogger receives compensation or any 
other form of payment from any candidate, political party, or political 
committee for his or her editorial content. Would any such payments 
mean that the blogger is ``controlled'' by a candidate or political 
party within the meaning of 2 U.S.C. 431(9)(B)(i), and therefore is not 
entitled to the exemption? The Commission has previously determined 
that ``commentary was intended to allow third persons access to the 
media to discuss issues.'' See AO 1982-44. Should bloggers' activity be 
considered commentary or editorializing, or news story activity?
    Lastly, the Commission seeks comment on any other issue pertinent 
to the Commission's consideration of whether to extend the protections 
of this statutory exemption to media activities on the Internet.

VIII. Proposed 11 CFR 100.94 and 100.155--Exceptions to the Definitions 
of ``Contribution'' and ``Expenditure'' for Individual or Volunteer 
Activity on the Internet

    Although the Internet is generally a free or low-cost medium for 
communication, the Act's definitions of ``contribution'' and 
``expenditure'' are broad enough to apply to some Internet activity. 
For example, 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) of the Act states that the term 
``expenditure'' includes ``any purchase, payment, distribution, loan, 
advance, deposit, 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 subparts B and D of 11 CFR part 100.
    Similarly, the Act's definition of ``independent expenditure'' is 
broad enough to apply to some 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); see also 11 CFR 100.16.
    However, the definition of ``contribution'' in the Act and 
Commission regulations does not include ``the value of services 
provided without compensation by any individual who volunteers on 
behalf of a candidate or political committee.'' 2 U.S.C. 431(8)(B)(i); 
11 CFR 100.74. Furthermore, the definition of a ``contribution'' 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 100.75 and 100.76. The 
Commission's regulations contain a parallel exception to the definition 
of ``expenditure'':

[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 100.135. See also 11 CFR 100.136.
    The Commission is proposing new rules to address the treatment of 
uncompensated individual or volunteer campaign activity on the 
Internet. Specifically, the Commission proposes the addition of two new 
sections to 11 CFR part 100 to provide new exceptions from the 
definition of contribution'' and ``expenditure.'' Proposed 11 CFR 
100.94 would create an exception to the definition of ``contribution'' 
for certain uncompensated individual or volunteer Internet activity, 
while proposed 11 CFR 100.155 would create a parallel exception to the 
definition of ``expenditure'' for the same activity.
    Under proposed 11 CFR 100.94 and 100.155, an uncompensated 
individual acting independently or as a volunteer would not make a 
contribution or expenditure simply by using computer equipment and 
services to engage in Internet activities for the purpose of 
influencing an election for Federal office. The Commission notes that 
the proposed rule would only apply to computer and other facilities to 
which the individual would otherwise have access. The proposed rule 
would not permit the purchase of equipment by an individual or entity 
solely for the purposes of allowing another individual to participate 
in Internet activity. The Commission seeks comment on this approach.
    In AO 1998-22, the Commission concluded that even if an individual 
acting independently incurs no additional costs in creating a Web site 
that contains express advocacy of a clearly identified candidate, at 
least some portion of the underlying costs of creating and maintaining 
that Web site is an expenditure under the Act and must be reported if 
it exceeds $250 in a calendar year. In contrast, in AO

[[Page 16976]]

1999-17, the Commission concluded that costs incurred by a campaign 
volunteer in preparing a Web site on behalf of a candidate on the 
volunteer's home computer are exempt from the definition of 
``contribution'' under the volunteer exception contained in section 
100.75 of the regulations (formerly section 100.7(b)(4)). The 
Commission stated 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 
determined that the costs of e-mail messages 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 proposed rules in new sections 100.94 and 100.155 would 
supersede AO 1998-22 to the extent that it treats an individual's 
independent use of computer equipment and services for Internet 
activity as an expenditure. The proposed rules would also extend beyond 
the specific guidance provided in AO 1999-17 to clarify that these 
exceptions would apply to an uncompensated individual acting 
independently or as a volunteer without regard to whether the 
individual or another person owns the computer being used or where the 
Internet activity is taking place. For example, the proposed rule would 
permit an individual or a volunteer to use computer equipment and 
services provided at a public facility, such as a library or school, or 
provided by a friend, without such Internet activity being a 
contribution or expenditure. The Commission, however, would continue to 
view the purchase of mailing lists (including e-mail lists) for the 
purposes of forwarding candidate and political committee communications 
as expenditures or contributions. The Commission seeks comment on this 
approach. If the computer equipment and service is provided by a 
corporation or labor organization, the rules at 11 CFR 114.9 would 
apply. The proposed rules would thereby avoid disparate treatment of 
individuals or volunteers who may not be able to afford the purchase or 
maintenance of their own computers or Web sites. The Commission invites 
comments on this approach. The Commission also seeks comments on 
whether this exception should be extended to volunteers who receive 
some form of payment or reimbursement from a candidate or a political 
committee, such as transportation, subsistence, or supplies. 
Additionally, the Commission seeks comments on whether the entirety of 
AOs 1998-22 and 1999-17, or any additional AOs, should be superseded or 
whether there is any aspect of those AOs that should remain valid.
    Under the proposed rules, individuals acting independently or as 
volunteers would come within this exception when using any ``computer 
equipment and services'' to engage in ``Internet activities.'' Specific 
examples of ``computer equipment and services'' would be listed in 
paragraph (c) of each section and would include, but would not be 
limited to, computers, software, Internet domain names, and Internet 
Service Provider(''ISP'') services (e.g., connecting to the Internet). 
``Internet activities'' would be defined in paragraph (b) of each 
section to include, but not be limited to, creating and sending e-mail 
or producing and maintaining a Web site or a blog. Furthermore, because 
many individuals who use the Internet cannot, or do not, maintain their 
own Web sites, or simply wish to post a blog in a place where it is 
more likely to be seen by others, there are a number of blog ``hosts'' 
that provide space on a Web site for other individuals to post their 
own blogs or other commentary. Individuals acting independently or as 
volunteers posting blogs or other content on the Web sites of these 
hosts would be entitled to the exception just as if the content were 
posted on their own Web site. However, the exceptions would not apply 
to paid advertising or other payments for the use of another person's 
Web site, other than a nominal fee. See current 11 CFR 100.75 and 
100.135 (a volunteer's payment of a nominal fee in the course of 
providing personal services does not constitute a contribution or 
expenditure).
    Thus, an individual or volunteer producing or maintaining a Web 
site or blog, or conducting other grassroots campaign activity on the 
Internet, from that individual's own home or elsewhere, would not make 
a contribution or expenditure and would not incur any reporting 
responsibilities as the result of that activity. For example, if an 
individual downloaded materials from a candidate or party Web site, 
such as campaign packets, yard signs, and other items, the downloading 
of such items would not constitute republication of campaign materials. 
In addition, even when the Internet activity is made in cooperation, 
consultation, or concert with a candidate or a political party 
committee, no contribution or expenditure would result and neither the 
candidate nor the political party committee would incur any reporting 
responsibilities. Furthermore, if an individual forwarded an e-mail 
received from a political committee, the forwarding of that e-mail 
would not constitute republication of campaign materials or be an in-
kind contribution. The Commission invites comments on this approach.
    The Commission notes that existing Commission regulations regarding 
volunteer activity use the concept of volunteer in the context of an 
individual volunteering personal services to a candidate, political 
committee, or political party. The proposed regulations would apply 
regardless of whether the individual's activities were known to a 
candidate, political party, or political committee. The Commission 
seeks comment on whether it has authority to do this and whether the 
word ``individual'' or ``volunteer'' more accurately conveys the 
concept of when an individual, whether known or unbeknownst to the 
campaign, engages in Internet activity.

IX. 11 CFR 114.9--Use of Corporate or Labor Organization Facilities and 
Means of Transportation

    The Commission's rules at 11 CFR 114.9 permit employees and 
stockholders of a corporation, as well as officials, members, and 
employees of a labor organization, to use corporate or labor 
organization ``facilities'' for individual volunteer activities in 
connection with a Federal election, so long as that use is 
``occasional, isolated, or incidental.'' 11 CFR 114.9(a)(1) and 
(b)(1).\25\ In order to clarify that corporate and labor organization 
``facilities'' include computer equipment and Internet services that 
could be used to exchange e-mail, produce or maintain Web sites, or 
engage in other activities over the Internet, the Commission proposes 
to amend 11 CFR 114.9(a)(1) and (b)(1) to expressly include 
``computers, software, and other Internet equipment and services,'' 
within the meaning of ``facilities.'' The Commission invites comments 
on this proposed revision.
---------------------------------------------------------------------------

    \25\ The use of equipment or services is ``occasional, isolated, 
or incidental'' during the workday if it does not prevent the 
individual from carrying out her normal duties or interfere with the 
corporation or labor organization carrying out its normal 
activities. See 11 CFR 114.9(a)(1) (i) and (ii) and (b)(1) (i) and 
(ii) The Commission has established a safe harbor such that an 
individual's activity during or outside working hours is considered 
``occasional, isolated, or incidental'' if it does not exceed one 
hour per week or four hours per month. 11 CFR 114.9(a)(1)(ii) and 
(b)(1)(iii). The examples of ``occasional, isolated, or incidental'' 
use are not exhaustive, and other uses may also qualify.
---------------------------------------------------------------------------

    In addition, the Commission notes that many corporations and labor

[[Page 16977]]

organizations now permit individuals to take laptops home and to use 
computers and other Internet services for non-work purposes. The 
Commission notes that a volunteer's use of a corporate or labor 
organization computer or Internet service for campaign activity over 
the Internet at home, or at locations outside of work, is still subject 
to the ``occasional, isolated, or incidental'' use restriction.
    The Commission further notes that corporations and labor 
organizations are prohibited from ``[u]sing coercion, such as the 
threat of a detrimental job action, the threat of any other financial 
reprisal, or the threat of force, to urge any individual to make a 
contribution or engage in fundraising activities on behalf of a 
candidate or political committee.'' 11 CFR 114.2(f)(2)(iv) (emphasis 
added); see also 2 U.S.C. 441b(b)(3). Because the proposed revisions to 
11 CFR 114.9(a) and (b) would expressly except the occasional, 
isolated, or incidental use of corporate or labor organization 
computers, software, and other Internet equipment and services from the 
definition of ``contribution,'' the Commission seeks comment on whether 
additional rules are necessary to ensure that corporations and labor 
organizations do not ``coerce'' their employees or others into engaging 
in Internet activities on behalf of a candidate or political committee. 
Should such an exemption be avoided in that it could lead to inherently 
coercive situations? Should it be premised on the corporation or labor 
organization not directing the individual to engage in activity on 
behalf of a certain candidate or political committee?

Certification of No Effect Pursuant to 5 U.S.C. 605(b) [Regulatory 
Flexibility Act]

    The Commission certifies that the attached proposed rules, if 
promulgated, would not have a significant economic impact on a 
substantial number of small entities. The basis for this certification 
is that the individuals and not-for-profit entities affected by these 
proposed rules are not ``small entities'' under 5 U.S.C. 601. The 
definition of ``small entity'' does not include individuals, but 
classifies a not-for-profit enterprise as a ``small organization'' if 
it is independently owned and operated and not dominant in its field. 5 
U.S.C. 601(4).
    State, district, and local party committees affected by these 
proposed rules are not-for-profit committees that do not meet the 
definition of ``small organization.'' State political party committees 
are not independently owned and operated because they are not financed 
and controlled by a small identifiable group of individuals, and they 
are affiliated with the larger national political party organizations. 
In addition, the State political party committees representing the 
Democratic and Republican parties have a major controlling influence 
within the political arena of their State and are thus dominant in 
their field. District and local party committees are generally 
considered affiliated with the State committees and need not be 
considered separately.
    Separate segregated funds affected by these proposed rules are not-
for-profit political committees that do not meet the definition of 
``small organization'' because they are financed by a combination of 
individual contributions and financial support for certain expenses 
from corporations, labor organizations, membership organizations, or 
trade associations, and therefore are not independently owned and 
operated.
    Most other political committees affected by these rules are not-
for-profit committees that do not meet the definition of ``small 
organization.'' Most political committees are not independently owned 
and operated because they are not financed by a small identifiable 
group of individuals. Most political committees rely on contributions 
from a large number of individuals to fund the committees operations 
and actives.
    To the extent that any State party committees representing minor 
political parties or any other political committees might be considered 
``small organizations,'' the number affected by this proposed rule is 
not substantial. Additionally, because the proposed rule preserves the 
Commission's general exclusion of Internet communications from the 
scope of regulation, any economic impact of complying with these rules 
will not be significant. Accordingly, to the extent that any other 
entities may fall within the definition of ``small entities,'' any 
economic impact of complying with these rules will not be significant.

List of Subjects

11 CFR Part 100

    Elections.

11 CFR Part 110

    Campaign funds, Political committees and parties.

11 CFR Part 114

    Business and industry, Elections, Labor.

    For the reasons set out in the preamble, the Federal Election 
Commission proposes to amend subchapter A of chapter 1 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, and 438(a)(8).

    2. Section 100.25 would be republished to read as follows:


Sec.  100.25  Generic campaign activity (2 U.S.C. 431(21)).

    Generic campaign activity means 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.
    3. Section 100.26 would be revised to read as follows:


Sec.  100.26  Public communication (2 U.S.C. 431(22)).

    Public communication means 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. The term general public political advertising shall not 
include communications over the Internet, except for announcements 
placed for a fee on another person's or entity's Web site.
    4. In Sec. 100.73, the introductory text would be revised to read 
as follows:


Sec.  100.73  News story, commentary, or editorial by the media.

    Any cost incurred in covering or carrying a news story, commentary, 
or editorial by any broadcasting station (including a cable television 
operator, programmer or producer), newspaper, magazine, or other 
periodical publication, whether the news story, commentary, or 
editorial appears in print or over the Internet, is not a contribution 
unless the facility is owned or controlled by any political party, 
political committee, or candidate, in which case the costs for a news 
story:
* * * * *
    5. Section 100.94 would be added to subpart C of part 100 to read 
as follows:


Sec.  100.94  Uncompensated individual or volunteer activity that is 
not a contribution.

    (a) Contribution. (1) No contribution results where an individual, 
acting independently or as a volunteer, without receiving compensation,

[[Page 16978]]

performs Internet activities using computer equipment and services that 
he or she personally owns for the purpose of influencing any Federal 
election, whether or not the individual's activities are known to or 
coordinated with any candidate, authorized committee or party 
committee.
    (2) No contribution results where an individual, acting 
independently or as a volunteer, without receiving compensation, 
performs Internet activities using computer equipment and services 
available at any public facility for the purpose of influencing any 
Federal election, whether or not the individual's activities are known 
to or coordinated with any candidate, authorized committee or party 
committee. The term ``public facility'' within the meaning of this 
section shall include, but is not limited to, public libraries, public 
schools, community centers, and Internet cafes.
    (3) No contribution results where an individual, acting 
independently or as a volunteer, without receiving compensation, 
performs Internet activities using computer equipment and services in 
his or her residential premises for the purpose of influencing any 
Federal election, whether or not the individual's activities are known 
to or coordinated with any candidate, authorized committee or party 
committee.
    (b) Internet activities. ``Internet activities'' within the meaning 
of this section shall include, but are not limited to: e-mailing, 
including forwarding; linking, including providing a link or hyperlink 
to a candidate's, authorized committee's or party committee's Web site; 
distributing banner messages; blogging; and hosting an Internet site.
    (c) Computer equipment and services. ``Computer equipment and 
services'' within the meaning of this section shall include, but are 
not limited to, computers, software, Internet domain names, and 
Internet Service Provider (ISP) services.
    6. In Sec. 100.132, the introductory text would be revised to read 
as follows:


Sec.  100.132  News story, commentary, or editorial by the media.

    Any cost incurred in covering or carrying a news story, commentary, 
or editorial by any broadcasting station (including a cable television 
operator, programmer or producer), newspaper, magazine, or other 
periodical publication, whether the news story, commentary, or 
editorial appears in print or over the Internet, is not an expenditure 
unless the facility is owned or controlled by any political party, 
political committee, or candidate, in which case the cost for a news 
story:
* * * * *
    7. Section 100.155 would be added to subpart E of part 100 to read 
as follows:


Sec.  100.155  Uncompensated individual or volunteer activity that is 
not an expenditure.

    (a) Expenditure. (1) No expenditure results where an individual, 
acting independently or as a volunteer, without receiving compensation, 
performs Internet activities using computer equipment and services that 
he or she personally owns for the purpose of influencing any Federal 
election, whether or not the individual's activities are known to or 
coordinated with any candidate, authorized committee or party 
committee.
    (2) No expenditure results where an individual, acting 
independently or as a volunteer, without receiving compensation, 
performs Internet activities using computer equipment and services 
available at any public facility for the purpose of influencing any 
Federal election, whether or not the individual's activities are known 
to or coordinated with any candidate, authorized committee or party 
committee. The term ``public facility'' within the meaning of this 
section shall include, but is not limited to, public libraries, public 
schools, community centers, and Internet cafes.
    (3) No expenditure results where an individual acting independently 
or as a volunteer, without receiving compensation, performs Internet 
activities using computer equipment and services in his or her 
residential premises for the purpose of influencing any Federal 
election, whether or not the individual's activities are known to or 
coordinated with any candidate, authorized committee or party 
committee.
    (b) Internet activities. ``Internet activities'' within the meaning 
of this section shall include, but are not limited to: e-mailing, 
including forwarding; linking, including providing a link or hyperlink 
to a candidate's, authorized committee's or party committee's Web site; 
distributing banner messages; blogging; and hosting an Internet site.
    (c) Computer equipment and services. ``Computer equipment and 
services'' within the meaning of this section shall include, but are 
not limited to, computers, software, Internet domain names, and 
Internet Service Provider (ISP) services.

PART 110--CONTRIBUTION AND EXPENDITURE LIMITATIONS AND PROHIBITIONS

    8. The authority citation for part 110 would continue to read as 
follows:

    Authority: 2 U.S.C. 431(8), 431(9), 432(c)(2), 437d, 438(a)(8), 
441a, 441b, 441d, 441e, 441f, 441g, 441h, and 36 U.S.C. 510.

    9. Section 110.11 would be amended by revising the introductory 
text in paragraph (a) to read as follows:


Sec.  110.11  Communications; advertising; disclaimers (2 U.S.C. 441d).

    (a) Scope. Public communications are those defined by 11 CFR 
100.26. For the purposes of this section, public communications will 
also include more than 500 unsolicited substantially similar electronic 
communications; Internet Web sites of political committees available to 
the general public; and electioneering communications as defined in 11 
CFR 100.29. Unsolicited e-mail shall be defined as those e-mail that 
are sent to electronic mail addresses purchased from a third party. The 
following types of such communications must include disclaimers, as 
specified in this section:
* * * * *

PART 114--CORPORATE AND LABOR ORGANIZATION ACTIVITY

    10. The authority citation for part 114 continues to read as 
follows:

    Authority: 2 U.S.C. 431(8)(B), 431(9)(B), 432, 434, 437d(a)(8), 
and 441b.

    11. In Sec. 114.9, the introductory text of paragraphs (a)(1) and 
(b)(1) would be revised to read as follows:


Sec.  114.9  Use of corporate or labor organization facilities and 
means of transportation.

    (a) Use of corporate facilities for individual volunteer activity 
by stockholders and employees.
    (1) Stockholders and employees of the corporation may, subject to 
the rules and practices of the corporation, make occasional, isolated, 
or incidental use of the facilities of a corporation for individual 
volunteer activities in connection with a Federal election and will be 
required to reimburse the corporation only to the extent that the 
overhead or operating costs of the corporation are increased. The 
facilities of a corporation within the meaning of this paragraph 
include computers, software, and other Internet equipment and services. 
As used in this paragraph, occasional, isolated, or incidental use 
generally means--
* * * * *

[[Page 16979]]

    (b) Use of labor organization facilities for individual volunteer 
activity by officials, members, and employees.
    (1) The officials, members, and employees of a labor organization 
may, subject to the rules and practices of the labor organization, make 
occasional, isolated, or incidental use of the facilities of a labor 
organization for individual volunteer activities in connection with a 
Federal election and will be required to reimburse the labor 
organization only to the extent that the overhead or operating costs of 
the organization are increased. The facilities of a labor organization 
within the meaning of this paragraph include computers, software, and 
other Internet equipment and services. As used in this paragraph, 
occasional, isolated, or incidental use generally means--
* * * * *

    Dated: March 29, 2005.
Scott E. Thomas,
Chairman, Federal Election Commission.
[FR Doc. 05-6521 Filed 4-1-05; 8:45 am]
BILLING CODE 6715-01-P