[Federal Register Volume 71, Number 70 (Wednesday, April 12, 2006)]
[Rules and Regulations]
[Pages 18589-18614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3190]



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  Federal Register / Vol. 71, No. 70 / Wednesday, April 12, 2006 / 
Rules and Regulations  

[[Page 18589]]



FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 110, and 114

[Notice 2006--8]


Internet Communications

AGENCY: Federal Election Commission.

ACTION: Final Rules and Transmittal to Congress.

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SUMMARY: The Federal Election Commission is amending its rules to 
include paid advertisements on the Internet in the definition of 
``public communication.'' These final rules 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 previous 
definition of ``public communication'' impermissibly excluded all 
Internet communications. The revised definition of ``public 
communication'' includes paid Internet advertising placed on another 
person's website, but does not encompass any other form of Internet 
communication. The Commission is also re-promulgating without change 
its definition of ``generic campaign activity'' and amending the scope 
of its disclaimer regulations, both of which incorporate the revised 
definition of ``public communication.'' Additionally, the Commission is 
adding new exceptions to the definitions of ``contribution'' and 
``expenditure'' to exclude Internet activities and communications that 
qualify as individual activity or that qualify for the ``media 
exemption.'' These final rules 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. Further information is 
provided in the Supplementary Information that follows.

DATES: Effective Date: May 12, 2006.

FOR FURTHER INFORMATION CONTACT: Mr. Brad C. Deutsch, Assistant General 
Counsel, Mr. Richard T. Ewell, Ms. Amy L. Rothstein, or Ms. Esa L. 
Sferra, Attorneys, 999 E Street, NW., Washington, DC 20463, (202) 694-
1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION:

Introduction

    The Commission is promulgating these final rules to provide 
guidance with respect to the use of the Internet in connection with 
Federal elections. The Commission commenced this rulemaking following a 
decision of the United States District Court for the District of 
Columbia in Shays v. Federal Election Commission, 337 F. Supp. 2d 28 
(D.D.C. 2004) (``Shays District''), aff'd, 414 F.3d 76 (D.C. Cir. 2005) 
(``Shays Appeal''), reh'g en banc denied (Oct. 21, 2005), which 
required the Commission to remove the former wholesale exclusion of 
Internet activity from its definitions of two terms: ``public 
communication'' and ``generic campaign activity.'' In examining issues 
relating to Internet communications, the Commission has also decided to 
address several of its other rules to remove potential restrictions on 
the ability of individuals and others to use the Internet as a low-cost 
means of civic engagement and political advocacy.
    These final rules follow the publication of a Notice of Proposed 
Rulemaking (``NPRM'') on Internet Communications, in which the 
Commission sought comments on several proposed revisions to its rules. 
See 70 FR 16967 (April 4, 2005). The Commission received more than 800 
comments in response to the NPRM, the vast majority of which urged 
limited, if any, regulation of Internet activities. Additionally, the 
Commission received a letter from the Internal Revenue Service 
indicating that ``the proposed rules do not pose a conflict with the 
Internal Revenue Code or the regulations thereunder.''
    After reviewing the written comments and testimony provided at a 
hearing on June 28 and 29, 2005,\1\ the Commission has decided to take 
the following six actions: (1) Revise its definition of ``public 
communication;'' (2) re-promulgate the definition of ``generic campaign 
activity'' without revision; (3) revise the disclaimer requirements; 
(4) add an exception for uncompensated individual Internet activities; 
(5) revise the ``media exemption;'' and (6) add a new provision 
regarding the use of corporate and labor organization computers and 
other equipment for Internet activities by certain individuals.
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    \1\ The comments and a transcript of the hearing are available 
at http://www.fec.gov/law/law_rulemakings.shtml#Internet05.
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    The Commission is aware of the heightened importance and public 
awareness of any change to its rules that could affect political 
activity and speech on the Internet. The Commission notes that the 
change to the definition of ``public communication'' in this rulemaking 
is a change to a definition that has a narrow impact on the law.\2\ 
This term defines the scope of covered activity for a limited number of 
groups who are either already subject to Commission regulation, or who 
are coordinating with candidates or political parties who are 
themselves currently subject to regulation. Congress did not use the 
term ``public communication'' to regulate the vast majority of the 
American public's activity on the Internet or elsewhere. Everyday 
activity by individuals, even when political in nature, will not be 
affected by the changes made in this rulemaking.
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    \2\ The change affects only the following regulatory provisions: 
the restrictions on funding of Federal election activity by 
political party committees and State and local candidates (2 U.S.C. 
431(20)); the allocation of costs of certain communications by some 
political committees under 11 CFR 106.6(b); the determination that 
certain communications must be treated as contributions if 
coordinated with a Federal candidate or political party committee 
under 11 CFR 109.21 and 109.37; and the requirement to include 
disclaimer statements on certain communications pursuant to 11 CFR 
110.11.
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    Through this rulemaking, the Commission recognizes the Internet as 
a unique and evolving mode of mass communication and political speech 
that is distinct from other media in a manner that warrants a 
restrained regulatory approach. The Internet's accessibility, low cost, 
and interactive features make it a popular choice for sending and 
receiving information. Unlike other forms of mass communication, the 
Internet has minimal barriers to entry, including its low cost and 
widespread accessibility. Whereas the general public can communicate 
through television or radio broadcasts and most other forms of mass 
communication only by paying

[[Page 18590]]

substantial advertising fees, the vast majority of the general public 
who choose to communicate through the Internet can afford to do so.
    When paid advertising on another person's website does occur on the 
Internet, the expense of that advertising sets it apart from other uses 
of the Internet, although even the cost of advertising on another 
entity's website will often be below the cost of advertising in some 
other media.
    These final rules therefore implement the regulatory requirements 
mandated by the Shays District decision by focusing exclusively on 
Internet advertising that is placed for a fee on another person's 
website. In addition, these rules add new exceptions to the definitions 
of ``contribution'' and ``expenditure'' to protect individual and media 
activity on the Internet.\3\
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    \3\ The terms ``contribution'' and ``expenditure'' include 
gifts, subscriptions, purchases, payments, distributions, loans, 
advances or deposits of money, or anything of value made by any 
person for the purpose of influencing any election for Federal 
office. See 2 U.S.C. 431(8)(A)(i) and 431(9)(A); see also 11 CFR 
Part 100, Subparts B & D.
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    As a whole, these final rules make plain that the vast majority of 
Internet communications are, and will remain, free from campaign 
finance regulation. To the greatest extent permitted by Congress and 
the Shays District decision, the Commission is clarifying and affirming 
that Internet activities by individuals and groups of individuals face 
almost no regulatory burdens under the Federal Election Campaign Act. 
The need to safeguard Constitutionally protected political speech 
allows no other approach.

Transmission of Final Rules to Congress

    Under the Administrative Procedure Act (``APA''), 5 U.S.C. 553(d), 
and the Congressional Review of Agency Rulemaking Act, 5 U.S.C. 
801(a)(1), agencies must submit final rules to the Speaker of the House 
of Representatives and the President of the Senate and publish them in 
the Federal Register at least 30 calendar days before they take effect. 
The final rules that follow were transmitted to Congress on March 29, 
2006.

Explanation and Justification

I. Unique Characteristics and Uses of the Internet

    The Internet has a number of unique characteristics that 
distinguish it from traditional forms of mass communication.\4\ Unlike 
television, radio, newspapers, magazines, or even billboards, ``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). In response to the 
NPRM, one commenter noted that a ``computer and an Internet connection 
can turn anyone into a publisher who can speak to a mass audience.'' 
For example, an individual with access to a computer and the Internet 
can create a free blog \5\ at sites such as www.blogger.com, 
www.blogeasy.com, spaces.msn.com, or www.typepad.com. Additionally, 
because an Internet communication is not limited in duration and is not 
subject to the same time and space limitations as television and radio 
programming, the Internet provides a means to communicate with a large 
and geographically widespread audience, often at very little cost.\6\ 
Now that many public spaces such as libraries, schools, and coffee 
shops provide Internet access without charge, individuals can create 
their own political commentary and actively engage in political debate, 
rather than just read the views of others. In the words of one 
commenter, the Internet's ``near infinite capacity, diversity, and low 
cost of publication and access'' has ``democratized the mass 
distribution of information, especially in the political context.'' The 
result is the most accessible marketplace of ideas in history.
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    \4\ 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).
    \5\ The word ``blog'' derives from the term ``Web log'' and is 
defined as ``an online diary; a personal chronological log of 
thoughts published on a Web page.'' Webster's New Millennium 
Dictionary of English, available at http://www.dictionary.com (last 
visited 3/24/06). People who maintain blogs are known as 
``bloggers.''
    \6\ See Edward L. Carter, 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.'').
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    It is common for businesses, groups, and even individuals, to make 
their own media--their website space--available to readers without 
charge. Whereas a newspaper can afford to devote only a limited amount 
of its print to others without charge, in the form of letters to the 
editor, and a television station can afford to provide only a very 
limited amount of air time to viewers for similar purposes, some 
bloggers can and often do publish every message submitted by readers. 
In fact, one commenter drew upon his own experience as a blogger in 
noting that much of the emerging Internet culture depends on 
collaboration for the construction of a blog or website, the generation 
of content (according to the blogger's testimony, most blogs do not 
have paid staff to perform such functions), and the sharing of 
information and online resources. The commenter stated that his website 
has more than 50,000 registered users contributing to its content, and 
he estimated that he writes only about 2,000 of the 200,000 words of 
content published on his website each day.
    A number of commenters also noted that the Internet differs from 
traditional forms of mass communication because individuals must 
generally be proactive in order to access information on a website, 
whereas individuals receive information from television or radio the 
instant the device is turned on, or passively view a billboard while 
driving or walking down a street. These comments echo the Supreme 
Court's observation that communications over the Internet are not as 
``invasive'' as communications made through traditional media. See 
Reno, 521 U.S. at 869. For example, a broadcast television viewer or 
radio listener who turns on his television or radio set is 
automatically subjected to the limited, available programming. In 
contrast, a website's information is seen only by those who actively 
take the steps necessary to find, visit, and view the website.
    During 2005, an estimated 204 million people in the United States 
used the Internet.\7\ In the first half of 2005, an estimated 67 
percent of the adult American population used the Internet.\8\ At the 
end of 2004, 87 percent of American teens (ages 12-17, representing the 
next generation of voters) were using the Internet,\9\ and on average, 
70 million American adults

[[Page 18591]]

logged onto the Internet on a daily basis.\10\
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    \7\ See Internet World Stats available at http://www.Internetworldstats.com/stats2.htm (last visited 3/24/06).
    \8\ See Pew Internet & American Life Project, How Women and Men 
use the Internet, p. I, (2005) available at http://www.pewInternet.org/pdfs/PIP_Women_and_Men_online.pdf (last 
visited 3/24/06).
    \9\ See Pew Internet & American Life Project, Teens and 
Technology, p. I (2005) available at http://www.pewInternet.org/pdfs/PIP_Teens_Tech_July2005web.pdf (last visited 3/24/06).
    \10\ 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 3/24/06).
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    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. By mid-2004, 92 million Americans reported 
obtaining news from the Internet.\11\
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    \11\ 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 3/24/06).
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    The 2004 election cycle also marked a dramatic shift in the scope 
and manner in which Americans used websites, blogs, listservs,\12\ and 
other Internet communications to obtain information on a wide range of 
campaign issues and candidates.\13\ The number of Americans using 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 18 percent 
of all Americans cited the Internet as their leading source of news 
about the 2004 presidential election.\16\
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    \12\ A ``listserv'' is a software program that automatically 
sends electronic mail messages to multiple e-mail addresses on an 
electronic mail list. See, e.g., http://www.lsoft.com/products/listserv.asp (last visited 3/24/06). The term ``listserv'' is 
commonly used, however, to denote the electronic mail 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 3/24/06).
    \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 10, above, The Mainstreaming of Online Life, p. 2.
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    Individuals not only sought information about campaigns on the 
Internet, but also took advantage of the low cost of Internet 
communication as they took active roles in supporting policies and 
candidates. According to a number of commenters, common Internet 
activities have included: Posting commentary regarding Federal 
candidates and political parties on their own websites; submitting 
comments regarding Federal candidates and political parties on websites 
owned by other individuals; creating advertisements, videos, and other 
audiovisual tools for distribution on the Internet; fundraising; 
promoting or republishing candidate-authored materials; participating 
in online ``chats'' about campaigns; providing hyperlinks from their 
own websites to campaign websites and other websites; and using e-mail 
to organize grassroots political activities.
    A number of commenters suggested that the potential for a free 
exchange of information and opinions through the Internet promotes 
access to information about candidates, ballot measures, and 
legislation. More than half of the hundreds of commenters expressed 
concern that the same unique characteristics of the Internet that make 
it so widely accessible to individuals and small groups also makes it 
more likely that individuals and small groups whose web activities 
generally are not regulated by FECA might engage in activities that 
unintentionally trigger Federal regulation. Whereas the corporations 
and other organizations capable of paying for advertising in 
traditional forms of mass communication are also likely to possess the 
financial resources to obtain legal counsel and monitor Commission 
regulations, individuals and small groups generally do not have such 
resources. Nor do they have the resources, as one commenter cautioned, 
to respond to politically motivated complaints in the enforcement 
context. Several commenters warned that individuals might simply cease 
their Internet activities rather than attempt to comply with 
regulations they found overly burdensome and costly. Thus, some 
commenters asserted, it is essential that the Commission narrow the 
scope and impact of any regulation of Internet activity and establish 
bright-line regulations to delineate any restricted activity in order 
to avoid chilling political participation and speech on the Internet.

II. Congressional Action, Commission Action, and the Courts

    The Bipartisan Campaign Reform Act of 2002, Public Law 107-155, 116 
Stat. 81 (2002) (``BCRA''), amended the Federal Election Campaign Act 
of 1971, as amended (the ``Act''), 2 U.S.C. 431 et seq., in various 
respects. The Commission implemented these changes in the law through a 
series of rulemakings during 2002.
    A number of these changes hinged on the definition of ``public 
communication.'' First, Congress required State, district, and local 
political party committees and organizations, as well as State and 
local candidates, to use only Federal funds \17\ to pay for any 
``public communication'' that promotes, supports, attacks or opposes 
(``PASOs'') a clearly identified candidate for Federal office. See 2 
U.S.C. 431(20)(A)(iii) and 441i(b) and (f); see also 11 CFR 
100.24(b)(3) and (c)(1), 300.32(a)(1) and (2), and 300.71.\18\ Congress 
defined 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). When the Commission promulgated 
regulations to implement these BCRA provisions, it explicitly excluded 
all Internet communications from its definition of ``public 
communication'' and, therefore, none of the Commission's rules 
governing the funding of ``public communications'' applied to Internet 
communications. See 11 CFR 100.26; Final Rules on Prohibited and 
Excessive Contributions; Non-Federal Funds or Soft Money, 67 FR 49064 
(July 29, 2002) (``Soft Money Final Rules'').
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    \17\ ``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).
    \18\ 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.
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    Second, Congress restricted the funds that State, district, and 
local political party committees may use for certain types of ``Federal 
election activity'' (``FEA''), including ``generic campaign activity.'' 
2 U.S.C. 431(20)(A)(ii) and 441i(b); 11 CFR 100.24(2)(ii) and 
300.33(a)(2).\19\ Congress defined

[[Page 18592]]

``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). The Commission incorporated the 
term ``public communication,'' along with its exclusion of Internet 
communications, into the definition of ``generic campaign activity'' in 
its rules. See 11 CFR 100.25; Soft Money Final Rules.
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    \19\ State, district, and local party committees and 
organizations may use an allocated mix of Federal funds and ``Levin 
funds'' to pay for ``generic campaign activity'' 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), or the party committee 
or organization must pay for the communication entirely with Federal 
funds. See 2 U.S.C. 441i(b)(2)(A); 11 CFR 300.32(b)(1)(ii), 
300.32(c) and 300.33. ``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.
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    Third, Congress expressly repealed the Commission's then-existing 
rules on ``coordinated general public political communication'' at 
former 11 CFR 100.23 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.'' See Public Law 107-155, sections 214(b) and (c) (March 
27, 2002); Final Rules on Coordinated and Independent Expenditures, 68 
FR 421 (Jan. 3, 2003) (``Coordinated Communication Final Rules''). When 
the Commission subsequently promulgated regulations implementing this 
provision, it required that a communication be a ``public 
communication'' as defined in 11 CFR 100.26 to qualify as either a 
``coordinated communication'' or a ``party coordinated communication.'' 
11 CFR 109.21(c) and 109.37(a)(2); \20\ see also Coordinated 
Communication Final Rules at 428-431. Thus, Internet communications 
were excluded from the regulations pertaining to ``coordinated 
communications'' and ``party coordinated communications.''
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    \20\ An ``electioneering communication'' may also be a 
coordinated communication. See 11 CFR 109.21(c)(1). However, because 
``electioneering communications'' are limited to broadcast, cable, 
or satellite communications, they constitute a subset of ``public 
communications.'' See 2 U.S.C. 434(f)(3); 11 CFR 100.29 (defining an 
``electioneering communication'' as a ``broadcast, cable, or 
satellite communication'' that refers to a clearly identified 
candidate for Federal office, is publicly distributed within 60 days 
before a general election for the office sought by the candidate, or 
within 30 days before the primary election for that office, and is 
targeted to the relevant electorate).
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    Fourth, Congress revised the ``disclaimer'' requirements in 2 
U.S.C. 441d by requiring a disclaimer whenever a disbursement for 
``general public political advertising'' is either made by any 
political committee, or expressly advocates the election or defeat of a 
clearly identified candidate, or solicits any contribution. The 
Commission relied primarily on the definition of ``public 
communication'' in 11 CFR 100.26 when it implemented the new disclaimer 
requirements, although it also required disclaimers for political 
committee websites available to the general public and certain 
unsolicited electronic mailings of more than 500 substantially similar 
communications. See 11 CFR 110.11(a); Final Rules on Disclaimers, 
Fraudulent Solicitation, Civil Penalties, and Personal Use of Campaign 
Funds, 67 FR 76962 (Dec. 13, 2002) (``Disclaimer Final Rules''). As a 
result, most Internet content was excluded from the disclaimer 
requirements. See id.
    The Commission also incorporated the term ``public communication'' 
into two other regulations at 11 CFR 300.2(b)(4) and 11 CFR 106.6, and 
thereby excluded Internet content from those requirements as well. The 
first of these regulations defines an ``agent'' of a candidate for 
State or local office as a person who has actual authority by that 
candidate to ``spend funds for a public communication.'' See 11 CFR 
300.2(b)(4); Soft Money Final Rules. The second of these rules 
incorporates the term ``public communication'' into the allocation 
rules governing certain spending by a separate segregated fund 
(``SSF'') or a nonconnected committee. See Final Rules on Political 
Committee Status, Definition of Contribution, and Allocation for 
Separate Segregated Funds and Nonconnected Committees, 69 FR 68056 
(Nov. 23, 2004) (``Political Committee Status Final Rules''). Whenever 
an SSF or nonconnected committee pays for a ``public communication'' 
that (1) refers to a political party, but does not refer to any clearly 
identified Federal or non-Federal candidate, or (2) refers to one or 
more clearly identified Federal candidates, the SSF or nonconnected 
committee must pay for the communication entirely with Federal funds or 
by allocating such expenses between its Federal and non-Federal 
accounts in accordance with 11 CFR 106.6(b) and (f). See id.
    The Shays District decision invalidated the Commission's definition 
of ``public communication'' at 11 CFR 100.26, Shays District at 64-65, 
based on the Commission's complete exclusion of Internet communications 
from this definition. After noting that Congress used the phrase ``or 
any other form of general public political advertising'' as a catch-all 
in BCRA's definition of ``public communication,'' the Shays 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.'' Shays District at 67.\21\ The Shays 
District 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.
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    \21\ The Shays District court analyzed the Commission's rules 
under a two-step 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 first step of the Chevron analysis examines 
whether Congress has directly spoken to the precise questions at 
issue. The second step considers whether the agency's resolution of 
an issue not addressed in the statute is based on a permissible 
construction of the statute. In reviewing the definition of ``public 
communication,'' the Shays District court found that the rule's 
exclusion of all Internet communications did not comport with the 
plain meaning of the statutory requirement that all forms of general 
public political advertising be considered forms of ``public 
communication,'' and therefore did not satisfy step one of the 
Chevron test. Shays District at 69-70. The Commission did not appeal 
the portion of the Shays District decision regarding the definition 
of a ``public communication.'' The Shays District decision also 
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) was 
impermissibly narrowed by the coordination regulation, thereby 
undermining the purposes of the Act and thus providing an 
independent basis for invalidation under step two of the Chevron 
test. See Shays District at 70-71.
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    The Shays District court also found the Commission's rule defining 
the term ``generic campaign activity'' to be similarly underinclusive 
because it incorporated the regulatory definition of ``public 
communication,'' which excluded all forms of Internet communications. 
Id. at 112. Although the Shays District court found that the 2002 
Notice of Proposed Rulemaking for ``generic campaign activity'' failed 
to satisfy the requirements of the APA because it did not provide 
adequate notice to the public that the Commission might define 
``generic campaign activity'' as a ``public communication'' in the 
final rules, the Shays District court otherwise approved the definition 
of ``generic campaign activity'' as limited to ``public 
communications.'' Id. at 112, citing the Soft Money Final Rules at 
35675.
    The Shays District court remanded the rules defining ``public 
communication,'' ``generic campaign activity,'' and ``coordinated 
communication'' to the Commission for further action consistent with 
its opinion. Shays District at 131. The Commission subsequently issued 
the

[[Page 18593]]

NPRM addressing the definition of ``public communication'' in each of 
the remanded regulations. In the NPRM, the Commission also noted that 
the term ``public communication'' is incorporated into two other 
sections of its regulations, 11 CFR 106.6(b) and (f) (allocation of 
expenses between Federal and non-Federal activities by SSFs and 
nonconnected committees), and 11 CFR 300.2(b)(4) (definition of 
``agent'' for non-Federal candidates). The Commission also proposed new 
exceptions from the definitions of ``contribution'' and ``expenditure'' 
to exempt volunteer and independent activity on the Internet, and 
proposed an additional clarification that certain Internet activities 
would qualify for the media exemption. In addition, the Commission 
proposed revisions to its rules in 11 CFR 114.9 regarding employee use 
of corporate and labor organization computers, software, and other 
Internet equipment and services for individual Internet activities.

III. 11 CFR 100.26--Definition of ``Public Communication''

A. Proposed 11 CFR 100.26 Published in the NPRM

    The Shays District decision required the Commission to identify 
those Internet communications that qualify as ``general public 
political advertising,'' and thus would be encompassed within the 
definition of ``public communication'' in 2 U.S.C. 431(22). While 
drafting a proposed rule, the Commission recognized the important 
purpose of BCRA in preventing actual and apparent corruption and the 
circumvention of the Act as well as the plain meaning of ``general 
public political advertising,'' and the significant public policy 
considerations that encourage the promotion of the Internet as a unique 
forum for free or low-cost speech and open information exchange. The 
Commission was also mindful that there is no record that Internet 
activities present any significant danger of corruption or the 
appearance of corruption, nor has the Commission seen evidence that its 
2002 definition of ``public communication'' has led to circumvention of 
the law or fostered corruption or the appearance thereof. Therefore, 
the Commission proposed to treat paid Internet advertising on another 
person's website as a ``public communication,'' but otherwise sought to 
exclude all Internet communications from the definition of ``public 
communication.'' \22\
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    \22\ The term ``person'' is defined to include ``an individual, 
partnership, committee, association, corporation, labor 
organization, or any other organization or group of persons, but 
such term does not include the Federal Government or any authority 
of the Federal Government.'' 2 U.S.C. 431(11).
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B. Comments on the Proposed Rule

    Most commenters who addressed the Shays District court's 
requirement that the Commission include some forms of Internet 
communications as ``general public political advertising'' expressed 
general support for the rule as proposed in the NPRM.\23\ These 
commenters praised the Commission's proposed separate treatment of 
communications on a person's own website as distinct from 
communications placed on another person's website, and nearly all 
commenters agreed that paid advertisements placed on another person's 
website are ``general public political advertising.'' One commenter 
noted that Congress had defined ``public communication'' in 2 U.S.C. 
431(22) by listing several examples of media such as television, radio, 
billboards and newspapers. That commenter observed that communications 
through the listed forms of media are typically placed for a fee. The 
commenter concluded that it would be appropriate from a statutory 
perspective for the Commission to capture within the definition of 
``public communication'' only those Internet communications placed for 
a fee on another person's website.
---------------------------------------------------------------------------

    \23\ Several commenters argued that the Commission should 
preserve the status quo and continue to exclude all Internet 
communications from the definition of ``public communication.'' The 
Commission does not believe that such an approach would comport with 
the Shays District decision.
---------------------------------------------------------------------------

    Another commenter generally supported the proposed rule, but 
recommended that the definition also encompass advertisements provided 
in exchange for something of value other than money (e.g., an 
advertising trade or link exchange). Two other commenters, however, 
cautioned against including any Internet communications that do not 
involve the exchange of money. In light of the unique nature and 
variety of Internet communications, these commenters explained, the 
value of these communications would be difficult to ascertain under the 
Commission's traditional tests for normal and usual charge or fair 
market value.\24\
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    \24\ The ``usual and normal charge for goods'' is defined as 
``the price of those goods in the market from which they ordinarily 
would have been purchased at the time of the [contribution or 
expenditure],'' and the ``usual and normal charge for services'' is 
defined as ``the hourly or piecework charge for the services at a 
commercially reasonable rate prevailing at the time the services 
were rendered.'' 11 CFR 100.57(d)(2) and 100.111(e)(2). See, e.g., 
Advisory Opinion 2006-01 (Pac for a Change) (discounted rate 
provided by publisher to other large-quantity purchasers is the 
normal and usual charge that candidate's committee is required to 
pay to purchase large quantities of the candidate's book).
---------------------------------------------------------------------------

    A few commenters expressed concern that the proposed rule would 
allow corporations and labor organizations to make unregulated in-kind 
contributions to Federal candidates through coordinated communications 
on the Internet, although such coordinated communications would be 
regulated or prohibited if done through other media. One group of 
commenters listed activities of this nature that they believed would be 
permitted under the proposed definition of ``public communication'' in 
11 CFR 100.26, including: (1) An individual, political committee, or 
corporation pays to place banner advertisements \25\ on another 
person's website for a fee; (2) a corporation or labor organization 
pays for a pop-up advertisement that will appear over another person's 
website; \26\ (3) an individual pays to hire a video production company 
to produce a video that contains a message written by a candidate for 
Federal office, purchases an e-mail list, and sends the video to all 
the addresses on the purchased list; and (4) a State party committee 
pays to produce a video that refers solely to a candidate for Federal 
office and distributes the video only through its own website. Each of 
these activities is addressed below.
---------------------------------------------------------------------------

    \25\ ``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 
website, which enables a viewer to ``click through'' the 
advertisement to view the advertiser's website for further 
information on the product or service advertised. See http://www.netlingo.com/lookup.cfm?term=ad+banner (last visited 3/24/06).
    \26\ ``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 3/24/06).
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C. Revised Rule: Internet Communications Placed on Another Person's 
Website for a Fee Are ``General Public Political Advertising''

    The Commission concludes that Internet communications placed on 
another person's website for a fee are ``general public political 
advertising,'' and are thus ``public communications'' as defined in 11 
CFR 100.26. Under this rule, when someone such as an individual, 
political committee, labor organization or corporation pays a fee to

[[Page 18594]]

place a banner, video, or pop-up advertisement on another person's 
website, the person paying makes a ``public communication.'' 
Accordingly, the final rule is largely the same as the proposed rule. 
While no other form of Internet communication is included in the 
definition of ``public communication,'' the placement of advertising on 
another person's website for a fee includes all potential forms of 
advertising, such as banner advertisements, streaming video, pop-up 
advertisements,\27\ and directed search results.\28\ The rule thus 
resolves concerns about the first two activities described in the 
previous paragraph.
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    \27\ Although a pop-up advertisement may not technically be part 
of the underlying website or account, the Commission determines that 
it is ``placed on'' a website such that it qualifies as a ``public 
communication'' when a fee is paid for the pop-up.
    \28\ For example, companies such as Google and Yahoo! permit an 
advertiser to pay a fee to have its website appear as a ``sponsored 
link,'' or otherwise featured, when specific words are typed into 
the website's search engine. See http://www.google.com/intl/en/webmasters/1.html (last visited 3/24/06) and http://searchmarketing.yahoo.com/srch/index.php (last visited 3/24/06). If 
a fee is paid for such a service, then the resulting display of the 
product, hyperlink, or other message constitutes a form of ``general 
public political advertising.'' However, when the search results are 
displayed as a result of the normal function of a search engine, and 
not based on any payment for the display of a result, the search 
results are not forms of ``general public political advertising.'' 
In addition, where a search engine returns a website hyperlink in 
its normal course, and features the same hyperlink separately as the 
result of a paid sponsorship arrangement, the latter is a ``public 
communication'' while the former is not.
---------------------------------------------------------------------------

    The revised definition of ``public communication'' comports with 
the Shays District decision by removing the wholesale exclusion of all 
Internet communications from the definition of ``public 
communication.'' At the same time, the rule is carefully tailored to 
avoid infringing on the free and low-cost uses of the Internet that 
enable individuals and groups to engage in political discussion and 
advocacy on equal footing with corporations and labor organizations 
(through their SSFs) and other political committees, without the need 
to raise large amounts of funds.
    The forms of mass communication enumerated in the definition of 
``public communication'' in 2 U.S.C. 431(22), including television, 
radio, and newspapers, each lends itself to distribution of content 
through an entity ordinarily owned or controlled by another person. 
Thus, for an individual to communicate with the public using any of the 
forms of media listed by Congress, he or she must ordinarily pay an 
intermediary (generally a facility owner) for access to the public 
through that form of media each time he or she wishes to make a 
communication. This is also true for mass mailings and telephone banks, 
which are other forms of ``public communication'' under 2 U.S.C. 
431(22). A communication to the general public on one's own website, by 
contrast, does not normally involve the payment of a fee to an 
intermediary for each communication.
    The cost of placing a particular piece of political commentary on 
the Web is generally insignificant. The cost of such activity is often 
only the time and energy that is devoted by an individual to share his 
or her views and opinions with the rest of the Internet community. In 
this respect, a communication through one's own website is analogous to 
a communication made from a soapbox in a public square. There is no 
evidence in the legislative history of BCRA of a Congressional intent 
to regulate individual speech simply because it takes place through 
online media.
    Communications placed for a fee on another person's website, 
however, are analogous to the forms of ``public communication'' 
enumerated by Congress in 2 U.S.C. 431(23), particularly in light of 
the growing popularity of Internet advertising. 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 33.9 percent 
between the third quarter of 2004 and the third quarter of 2005 and 
reached $3.1 billion for the third quarter of 2005.\29\ The cost of 
advertising on the Internet distinguishes it from other forms of 
Internet communication, such as blogging or publishing one's own 
website, which are generally performed for free or at low cost.
---------------------------------------------------------------------------

    \29\ See Interactive Advertising Bureau, ``Internet Advertising 
Revenues Surpass $3 Billion for Q3; Run Rate for Full Year 2005 on 
Pace to Exceed $12 Billion'' (Nov. 21, 2005), available at http://www.iab.net/news/pr_2005_11_21.asp (last visited 3/24/06).
---------------------------------------------------------------------------

    Moreover, because Congress did not include the Internet in the list 
of media enumerated in the statutory definition of ``public 
communication,'' an Internet communication can qualify as a ``public 
communication'' only if it is a form of advertising and therefore falls 
within the catch-all category of ``general public political 
advertising.'' See 2 U.S.C. 431(22). By definition, the word 
``advertising'' connotes a communication for which a payment is 
required, particularly in the context of campaign messages. See, e.g., 
The American Heritage[reg] Dictionary of the English 
Language (4th ed. 2000) (``The activity of attracting public attention 
to a product or business, as by paid announcements in the print, 
broadcast or electronic media.''); The Random House Webster's 
Unabridged Dictionary (2d ed. 2005) (``1. The act or practice of 
calling public attention to one's product, service, need, etc., esp. by 
paid announcements in newspapers and magazines, over radio or 
television, on billboards, etc.; * * * 2. paid announcements; 
advertisements.''); J.I. Richards and C. M. Curran, Oracles on 
``Advertising'': Searching for a Definition, 31 Journal of Advertising 
at 3 (June 2002) (An extensive survey of advertising and marketing 
textbooks revealed ``certain recurring elements: (1) Paid, (2) 
nonpersonal, (3) identified sponsor, (4) mass media, and (5) persuade 
or influence.'')
    The Commission notes that this definition of ``public 
communication'' encompasses the types of advertising that some 
commenters believed should be covered, such as payments by anyone on 
behalf of a candidate or political committee for advertising on another 
person's website. As discussed below, this rule should be read together 
with other existing regulations regarding coordinated and independent 
expenditures and communications by corporations, labor organizations, 
and political committees.
    On the Internet, where individuals can build blogs and other 
websites for free, an individual can communicate with the general 
public at little or no cost. However, this is not true in the case of 
paid advertising on another person's website. For example, one of the 
commenters operates a website and sells advertising space for between 
$1,300 and $5,000 per week.\30\ Another commenter stated that the 
``minimum to run a banner ad campaign on most newspaper websites and 
portals is roughly $5,000.'' The Chicago Tribune, for example, charges 
$5,000 per week for a ``header ad'' on www.chicagotribune.com, and 
$20,000 per week for a ``homepage cube.'' See 
www.tribuneinteractive.com/chicago/mediakit/rates.htm (last visited 3/
24/06). Although paying for an advertisement on Chicagotribune.com may 
be less expensive than paying to place the same advertisement in the 
Chicago Tribune newspaper, both still require substantial funding. 
Furthermore, in both cases the advertiser is paying for access to an 
established audience using a forum controlled by another person, rather

[[Page 18595]]

than using a forum that he or she controls to establish his or her own 
audience.
---------------------------------------------------------------------------

    \30\ See http://www.dailykos.com/special/advertising (last 
visited 3/24/06).
---------------------------------------------------------------------------

    Three commenters requested a clarification regarding the proposed 
rule's exclusion of all Internet ``communications'' with the exception 
of certain paid ``announcements,'' and asked whether the Commission 
intended to attach any significance to the use of ``announcements'' 
instead of ``communications'' in the exception. The Commission did not 
intend any distinction through the use of different terms. To avoid 
confusion, the Commission has substituted ``communication'' in place of 
``announcement'' in the final rule.
    One of the commenters suggested adding a content requirement to the 
Commission's definition of ``public communication'' by substituting the 
term ``express advocacy'' \31\ for ``announcement'' and 
``communication.'' The Commission is not limiting the definition of 
``public communication'' by requiring any particular content, such as 
``express advocacy.'' There is no content requirement in the statutory 
definition of ``public communication,'' and there is no other basis for 
providing an additional content standard in the definition itself, 
whether the communications are made through the Internet or another 
medium. See 2 U.S.C. 431(22). The content of the communication is 
addressed separately, such as the requirement that a State, district, 
or local party committee use only Federal funds to pay for ``public 
communications'' that PASO a Federal candidate. See, e.g., 2 U.S.C. 
431(20); 11 CFR 100.24(b)(3) and (c)(1), 300.32(a)(1) and (2), and 
300.71. Thus, limiting the definition of ``public communication'' to 
only those communications containing ``express advocacy'' would be 
inconsistent with the Act's recognition in section 431(20) that some 
``public communications'' contain PASO messages, but not express 
advocacy.
---------------------------------------------------------------------------

    \31\ The term ``expressly advocating'' is defined in 11 CFR 
100.22 to include phrases such as ``vote for the President, re-elect 
your Congressman,'' and other slogans and words ``which in context 
can have no other reasonable meaning than to urge the election or 
defeat of one or more clearly identified candidate(s),'' or that, 
``when taken as a whole and with limited reference to external 
events such as the proximity to the election, could only be 
interpreted by a reasonable person as containing advocacy of the 
election or defeat of one or more clearly identified candidates.''
---------------------------------------------------------------------------

    A different commenter suggested substituting ``advertising'' in 
place of ``communication.'' The Commission is not adopting this 
suggestion because it is circular and could inject ambiguity into the 
definition of ``public communication.'' The result of the commenter's 
proposed change would be that ``Internet advertising placed for a fee'' 
would be a form of ``general public political advertising.'' That 
approach would appear to indicate that there are forms of advertising 
on the Internet other than paid advertising, which is contrary to the 
Commission's view and to the basis of the revised definition of 
``public communication,'' which rests on the definition of 
``advertising'' as a paid communication.

D. No Threshold Payment Amount for ``General Public Political 
Advertising''

    Several commenters argued that low-cost ``pay-per-click'' ads are 
too difficult to value because the cost of the advertisement is often 
variable, measured after the fact, and too low to warrant regulation as 
a ``public communication.'' For example, one commenter pointed to 
advertising opportunities available for $10-$25 per week through 
BlogAds.com. Commenters urged the Commission to revise the definition 
of ``public communication'' to capture only paid Internet ads that cost 
more than a certain threshold dollar amount. One of these commenters 
recommended that the Commission seek additional comment to determine 
the appropriate threshold amount and to index that resulting amount for 
inflation or re-examine the amount on a regular basis.
    The Commission is not establishing a minimum threshold amount in 
the final rule. There is no stated threshold payment amount in the 
statutory definition of ``public communication,'' and it is not clear 
on what statutory basis the Commission could establish one. Nor was the 
Commission able to establish a record that would justify a particular 
threshold. Congress could have chosen, but did not, to establish a 
specific threshold cost below which an advertisement would not be a 
``public communication.'' Thus, even late-night advertisements on small 
radio stations, low-cost classified ads in small circulation 
newspapers, and low-cost billboards in relatively remote areas are 
forms of ``public communication'' under 2 U.S.C. 431(13). Accordingly, 
all Internet communications placed for a fee on another person's Web 
site qualify as ``public communications.''
    Nevertheless, as a matter of enforcement policy, the Commission may 
exercise prosecutorial discretion regarding ``public communications'' 
on the Internet that involve insubstantial advertising charges. The 
amount claimed to have been spent in violation of law is always a 
factor in the Commission's enforcement decisions, and here, the 
Commission will be additionally mindful of the importance of minimizing 
any potential regulatory burden on the use of the Internet.

E. Advertiser, Not Web Site Operator, Makes the ``Public 
Communication''

    One commenter requested that the Commission clarify that the person 
who makes a ``public communication'' is the person seeking to place an 
Internet advertisement on another person's Web site, not the person 
controlling the Web site on which the advertisement appears. The 
Commission agrees that this is the intended operation of the rule and 
notes that the regulations that incorporate the term ``public 
communication'' clearly regulate the person paying for the ``public 
communication.'' See 11 CFR 100.24(b)(3) and (c)(1), 106.6, 109.21, 
109.37, 110.11, 300.2, 300.32(a)(1) and (2), and 300.71. For example, 
if a political party committee pays an Internet advertising company to 
place a pop-up advertisement on a certain Web site, or to place the 
pop-up advertisement in a manner that it will be triggered based on 
some other action of a computer user, the political party committee--
not the advertising company or the Web site owner--would be subject to 
the applicable restrictions on ``public communications.'' The 
Commission also notes that, as with other media included in the 
definition of ``public communication,'' the obligation to ensure that 
permissible sources are used rests with the entity whose funding is 
restricted by FECA, and not the Web provider.

F. Bloggers Not Addressed Separately

    In the NPRM, the Commission noted that its proposed regulations 
were unlikely to cover blogging activities. Nevertheless, the 
Commission asked whether it should revise the proposed rule to 
explicitly exclude all ``blogs'' from the definition of ``public 
communication.'' Each of the bloggers who testified at the hearing, and 
the majority of commenters who addressed this issue, warned against 
crafting a regulation tied to specific forms of Internet communication 
like blogging. One commenter noted that while at present blogs might be 
readily distinguished from other Web sites based on particular software 
used to generate the blog, that software is likely to change. Moreover, 
this commenter noted that other forms of communications, such as peer-
to-peer

[[Page 18596]]

``podcasting,'' \32\ may soon replace blogs as the ubiquitous format 
for low-cost Internet discussion and debate. Another commenter 
cautioned that providing special protection for bloggers might 
disadvantage others engaged in different yet analogous forms of 
Internet communication.
---------------------------------------------------------------------------

    \32\ ``Podcasting'' is a form of file distribution that is 
currently used primarily to distribute audio files, like a radio 
program, over the Internet in a format that can be received and 
played through an Apple iPod or similar device. See http://www.ipodder.org/whatIsPodcasting (last visited 3/24/06).
---------------------------------------------------------------------------

    In light of the evolving nature of Internet communications, the 
Commission is not explicitly excluding from the definition of ``public 
communication'' any particular software or format used in Internet 
communications. The final rules already exclude ordinary blogging 
activity from the definition of ``public communication'' because blog 
messages are not placed for a fee on another person's Web site. Thus, 
an explicit exclusion focused on ``blogging'' is not only unnecessary 
but also potentially confusing to the extent that it implies that other 
forms of Internet communication, such as ``podcasting'' or e-mailing, 
might be regulated absent an explicit exclusion for each different form 
of Internet communication.

G. Paid Advertising on a Web Site Is a Form of ``General Public 
Political Advertising'' Even Where the Web Site Is Only Available to 
the Restricted Class of a Corporation or Labor Organization, or the 
Members of a Membership Organization

    The revision to the definition of ``public communication'' does not 
affect the regulations governing corporate or labor organization 
communications within and outside of its restricted class,\33\ or with 
the ability of a membership organization to communicate with its 
members on any subject.\34\ The Commission sought comment, however, on 
the appropriate treatment of advertisements placed for a fee by a 
third-party advertiser on a corporation's or labor organization's Web 
site that is solely available to its restricted class, or on a 
membership organization's Web site available only to its members. 
Specifically, the Commission asked whether such advertisements should 
be excluded from the definition of ``public communication.'' NPRM at 
16971. For example, if a political party committee pays to place an 
advertisement on a labor organization's password-protected Web site 
that is available only to that labor organization's restricted class, 
should that advertisement be considered a ``public communication''?
---------------------------------------------------------------------------

    \33\ The ``restricted class'' of a corporation is its 
stockholders and executive or administrative personnel, and their 
families, and the executive and administrative personnel of its 
subsidiaries, branches, divisions, and departments and their 
families. 11 CFR 114.1(j); see also 11 CFR 114.1(c). The 
``restricted class'' of a labor organization is its members and 
executive or administrative personnel, and their families. Id.
    \34\ Under the Act and Commission regulations, corporations and 
labor organizations may communicate with members of their restricted 
class on ``any subject.'' See 2 U.S.C. 431(9)(B)(iii) and 
441b(b)(2)(A); 11 CFR 100.134(a) and 114.3(a); see also Advisory 
Opinion 1997-16 (Oregon Natural Resources Council Action). 
Membership organizations may similarly communicate with their 
members. Id. Corporations, labor organizations, and membership 
organizations are generally prohibited, however, from making 
communications to the general public in connection with a Federal 
election, but they may publicly endorse Federal candidates on their 
Web sites in the normal course of releasing a press release so long 
as the press release is distributed in the normal manner and the 
organizations make efforts to allow only de minimis exposure of 
their Web sites beyond their restricted classes. See 11 CFR 
114.4(c)(6) and Advisory Opinion 1997-16. Thus, corporations, labor 
organizations, and membership organizations may expressly advocate 
the election or defeat of a clearly identified Federal candidate on 
the corporate or labor organization Web sites that are solely 
available to their respective restricted class. See discussion of 
revisions to 11 CFR 100.132 in section IX, below, and 11 CFR 
114.5(g); see also Advisory Opinions 2000-07 (Alcatel USA, Inc.) 
(corporation permitted to solicit its restricted class by providing 
a password to members of the restricted class and limiting access to 
its Web site solely to those password holders) and 1997-16 
(membership organization prohibited from making a list of candidate 
endorsements available on its Web sites unless it limited access to 
the list to its members only).
---------------------------------------------------------------------------

    The Commission concludes that it should. There is no basis in the 
Act or the Shays District decision to justify such an exception to the 
definition of ``public communication.'' Moreover, three of the four 
commenters addressing this issue opposed a special exclusion on the 
grounds that a third-party advertiser does not have a special 
relationship with members of the restricted class of a corporation or 
labor organization that could justify treating Web site advertisements 
to this group of individuals differently than other paid Internet 
advertisements.\35\ One of these commenters, a labor organization, 
explained that ``by definition, the payor of this sort of political 
advertising is a stranger to the restricted class that is the audience, 
and because that is so, we do not believe that under that circumstance 
a blanket exemption would be appropriate.''
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    \35\ The other commenter addressing the issue supported an 
exception covering communications ``from corporations and labor 
organizations to their restricted classes.'' These communications, 
however, would not result in a ``public communication'' under the 
proposed or final rules because they are not communications placed 
on another person's Web site for a fee.
---------------------------------------------------------------------------

    The Commission agrees that the relationship between a third-party 
advertiser and members of a corporation's or labor organization's 
restricted class, or members of a membership organization, is not 
sufficiently distinctive to warrant a special exception to the 
definition of ``public communication.'' Therefore, a paid Internet 
advertisement is a ``public communication'' even if the advertisement 
is available only to the restricted class of a corporation or labor 
organization, or the members of a membership organization.

H. Electronic Mail is Not a Form of ``General Public Political 
Advertising''

    The definition of ``public communication'' proposed in the NPRM did 
not encompass any e-mail communications. None of the commenters 
specifically addressed this aspect of the proposed rule, other than to 
state their general agreement with the limited scope of the proposed 
rule.
    The Commission does not consider e-mail to be a form of ``general 
public political advertising'' because there is virtually no cost 
associated with sending e-mail communications, even thousands of e-
mails to thousands of recipients, and there is nothing in the record 
that suggests a payment is normally required to do so.\36\ All of the 
forms of ``public communication'' expressly listed by Congress normally 
involve at least some charge for delivery, such as telephone charges or 
postage.
---------------------------------------------------------------------------

    \36\ Numerous e-mail service providers, such as Hotmail, Google, 
and Yahoo!, provide free Web-based e-mail accounts that permit a 
user to receive and send thousands of e-mail messages without 
charge. See http://join.msn.com/?page=hotmail/plans&pgmarket (last 
visited 3/24/06), http://mail.google.com/mail/help/about.html (last 
visited 3/24/06), http://dir.yahoo.com/Business_and_Economy/Business_to_Business/Communications_and_Networking/Internet_and_World_Wide_Web/E-mail_Providers/Free_E-mail (last visited 
3/24/06).
---------------------------------------------------------------------------

    In addition, Congress does not view e-mail in the same manner as 
mass mailings. The House of Representatives' franking rules place 
various franking restrictions on an ``unsolicited mass communication,'' 
which relies on a threshold (500 or more communications) that is almost 
identical to the threshold in ``mass mailing'' at 2 U.S.C. 431(23). 
Although mass e-mail communications were subject to the restrictions at 
the time BCRA was enacted, on September 5, 2003, the Committee on House 
Administration revised its own franking rules to remove mass e-mail 
communications from the list of ``unsolicited mass communications''

[[Page 18597]]

requiring pre-authorization from the Franking Commission. See ``Meeting 
to Approve New Electronic Communications Policy'' at http://www.access.gpo.gov/congress/house/house08bm108.html. While not 
controlling in this rulemaking, the e-mail exclusion is indicative of a 
Congressional view that e-mail is appropriately regulated differently 
than postal mail. Accordingly, the revised definition of ``public 
communication'' does not encompass e-mail communications.

I. Costs of Producing Videos and Other Content for Communications

    Under the Commission's revised rules at 11 CFR 100.26, posting a 
video on a Web site does not result in a ``public communication'' 
unless it is placed on another person's Web site for a fee. 
Nevertheless, one group of commenters called on the Commission to 
clarify the treatment of expenses by State, district or local party 
committees for the production costs of videos and other content 
displayed only on those committee's own Web sites. The commenters 
observed that the Commission generally treats the costs of producing 
campaign-related materials as subject to the same funding limits and 
source prohibitions as the costs of distributing the materials. For 
example, the direct costs of producing an ``electioneering 
communication'' are treated the same as the costs of distributing the 
communication and are included within the costs of that communication. 
11 CFR 104.20(a)(2) (``costs charged by a vendor, such as studio rental 
time, staff salaries, costs of video or audio recording media, and 
talent'').
    Because the Commission is promulgating regulations that will place 
funding limits and source prohibitions on some specific content when it 
is placed for a fee on a third-party's Web site, a State party 
committee that pays to produce a video that PASOs a Federal candidate 
will have to use Federal funds when the party committee pays to place 
the video on a Web site operated by another person. This is entirely 
consistent with how the party committee would be required to pay for a 
communication that it distributes through television or any other 
medium that is a form of ``public communication.'' In such 
circumstances, the party committee must pay the costs of producing and 
distributing the video entirely with Federal funds. See 11 CFR 
300.32(a)(2).

J. No Separate Definition of ``Public Communication'' for Web Sites of 
State, District, and Local Party Committees

    Although the revised definition of ``public communication'' 
encompasses only those Internet communications that are placed for a 
fee on another person's Web site, the NPRM sought comment on whether 
the definition should be further expanded to encompass all Web sites of 
State, district, and local party committees. The Commission concludes 
that it should not.
    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) (emphasis added); see also 11 CFR 100.24(b)(3). State, 
district, and local political party committees and organizations and 
their agents, as well as State and local officeholders and candidates 
and their agents, are prohibited from using any non-Federal funds to 
pay for this type of FEA. 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.
    In the NPRM, the Commission explained that one reason it had 
originally excluded Internet activities from the definition of ``public 
communication'' in 11 CFR 100.26 was to permit State, district, and 
local party committees to refer to their Federal candidates on the 
committees' own Web sites or post generic campaign messages without 
requiring that the year-round costs of maintaining the Web site be paid 
entirely with Federal funds. NPRM at 16971. The record in this 
rulemaking demonstrates that State, district, and local party 
committees generally use their Web sites to promote a variety of party 
policies and candidates, and that these Web sites are not predominantly 
focused on Federal elections. Furthermore, given the ease of adding new 
Web pages to a Web site or altering the content of existing Web pages, 
both the number of Web pages within a Web site and the content of those 
pages change frequently, sometimes daily or even hourly. For example, a 
Federal candidate might be featured on a hyperlink from the home page 
of a State party committee Web site one day, but that hyperlink may be 
removed the next day as the party committee replaces it with a more 
current story.
    One commenter supporting the proposed rule argued that it would be 
difficult, if not impossible, to identify a severable ``Federal'' 
portion of a State party committee Web site in light of a State party 
committee's frequent changes to its Web site content. Not only would 
the determination of the appropriate portion require a snapshot of a 
Web site at one particular time that would render the result somewhat 
arbitrary and inaccurate in light of the frequently changing content on 
the Web site, but it could also be easily manipulated because of the 
ease and low cost of generating new Web pages. For example, any 
percentage-based system (percentage of Web pages or Web space dedicated 
to Federal candidates) would require a calculation of the total number 
of Web pages or files comprising the party committee Web site. The 
logistical hurdles to this approach, coupled with the difficulty in 
determining the costs to be allocated, underscore the Commission's 
decision not to proceed in this fashion.
    The commenter also warned that treating a State, district, or local 
party committee Web site as a ``public communication'' would deter 
these party committees from featuring Federal candidates or 
participating in ``generic campaign activity'' at all on their Web 
sites. The commenter explained that even if a party committee's Web 
site PASOs a Federal candidate on only a small portion of its Web site, 
such as a few lines on one Web page for a period of a few days, the 
committee would have to file monthly reports with the Commission for 
the remainder of the calendar year.\37\
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    \37\ No commenters or witnesses supplied comments that would 
assist the Commission in determining how a State, district, or local 
party committee would pay for a Web site that was captured under the 
definition of ``public communication.'' The statute and regulations 
do not require a local party committee to pay for all of its 
``public communications'' with Federal funds, only those that PASO a 
Federal candidate or otherwise constitute FEA, such as ``generic 
campaign activity.'' The Commission asked in the NPRM how the 
organizations would go about allocating the costs associated with 
the Web site if the Commission determined that Web sites for these 
organizations are ``public communications.'' Some commenters who 
supported including State, district, and local party committee Web 
sites in the definition of ``public communication'' suggested that a 
time/space allocation would be appropriate. However, the Commission 
is not convinced that the statute permits time/space allocation of 
any ``public communication'' that features PASO information about a 
Federal candidate. The existence of PASO would require the 
organizations to pay for the ``public communications,'' i.e., the 
Web site itself, entirely with Federal funds. Such a result is 
inconsistent with the Act's regulation of Federal, but not non-
Federal activity. For example, such a determination could have a 
ripple effect on the payment of other costs. The acquisition of the 
computers or the phone line (two costs that are generally allocated 
as administrative expenses) arguably could become expenses that 
would be required to be paid for entirely with Federal funds because 
one of the uses of the equipment would be to access or maintain a 
Web site.

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[[Page 18598]]

    Three other groups of commenters, however, advocated for a 
definition of ``public communication'' that included the individual Web 
sites of State, district, and local party committees. They argued that 
the term ``general public political advertising'' should be defined 
differently with respect to different speakers, applying a broad 
definition of ``general public political advertising'' to encompass 
less activity by individuals, but more Internet activity by State, 
district, and local party committees, other political committees, 
corporations, and labor organizations.\38\ One group asserted that 
State, district, and local party committees should be particularly 
restricted by a broad definition of ``public communication'' because 
Congress used the term ``public communication'' in BCRA to restrict the 
use of non-Federal funds by State, district, and local party 
committees. See 2 U.S.C. 431(20)(A)(iii) and 441i(b).
---------------------------------------------------------------------------

    \38\ One of these commenters called for limited rules focused 
exclusively on communications coordinated with corporations, while 
excluding all other communications. A different commenter urged the 
Commission to establish a separate rule for communications by State 
party committees on the grounds that ``campaign finance laws provide 
for different levels of regulation of individuals, corporations and 
labor unions, and political committees (including party 
committees).'' The four principal Congressional sponsors of BCRA 
asserted that the definition of ``general public political 
advertising'' applicable to State party committees should encompass 
all Internet communications ``intended to be seen by the general 
public.'' Similarly, a different group of commenters stated that a 
political committee should be deemed to make a ``public 
communication'' whenever it ``spends funds to communicate broadly 
over the Internet--buying Web site ads, sending e-mails, maintaining 
its own publicly accessible Web site-- * * * just as if it were 
spending funds to communicate by broadcast or mass mailing.''
---------------------------------------------------------------------------

    The Commission disagrees with these latter commenters and is not 
including content placed by a State, district, or local party committee 
on its own Web site within the definition of ``public communication.'' 
As explained above, a political party committee's Web site cannot be a 
form of ``public communication'' any more than a Web site of an 
individual can be a form of ``public communication.'' In each case, the 
Web site is controlled by the speaker, the content is viewed by an 
audience that sought it out, and the speaker is not required to pay a 
fee to place a message on a Web site controlled by another person.
    More importantly, Congress defined ``public communication'' in 
terms of the types of media used to convey a message (e.g., newspaper, 
magazine, broadcast, mass mailing, phone bank), not the identity of the 
speaker using that media. 2 U.S.C. 431(22). There is simply no 
statutory support for defining ``public communication'' differently for 
different persons, whether they be individuals, groups, or political 
party committees. Instead, because Congress provided only one broadly 
applicable definition of ``public communication,'' the Commission is 
not free to conclude that a communication made through the same media 
is a ``public communication'' when made by an individual, but not when 
made by a political committee. Conversely, the Commission cannot 
conclude that a communication is not a ``public communication'' when 
made by an individual, but is a ``public communication'' if made by a 
party committee through the same media.
    The definition of ``public communication'' at 2 U.S.C. 431(22) is 
just that: a definition. Congress could have, but did not, define the 
``public communication'' differently with respect to different 
speakers. Instead, Congress chose to distinguish between different 
speakers only when establishing the consequences of making a ``public 
communication.'' The different treatment of different speakers is 
therefore provided separately in the Act, rather than in the definition 
of ``public communication'' itself. See 2 U.S.C. 431(20)(A)(iii) 
(including ``public communication'' in the definition of ``Federal 
election activity''), 2 U.S.C. 441i(b) and (f) (prohibiting State, 
district, and local party committees, and State and local candidates, 
but not other political committees or individuals other than candidates 
or officeholders, from paying for FEA with non-Federal funds), and 2 
U.S.C. 434(e)(2) (requiring State, district, and local party committees 
to report receipts and disbursements for FEA that total at least $5,000 
per calendar year).

IV. 11 CFR 100.25--Definition of ``Generic Campaign Activity'' Is Not 
Changed

    BCRA defines ``generic campaign activity'' as ``campaign activity 
that promotes a political party and does not promote a candidate or 
non-Federal candidate.'' 2 U.S.C. 431(21). In 2002, as part of a 
rulemaking implementing BRCA, the Commission defined ``generic campaign 
activity'' 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.'' 67 FR 49064, 49111; 11 
CFR 100.25 (emphasis added). The Act requires State, district, and 
local party committees that conduct ``generic campaign activity'' in 
connection with an election in which a candidate for Federal office 
appears on the ballot to finance such activities with Federal funds or 
a mix of Federal funds and Levin funds. 2 U.S.C. 441i(b) and 
431(20)(A); 11 CFR 100.24 and 300.33.
    As noted above, the Shays District court remanded the Commission's 
definition of ``generic campaign activity'' on two grounds: first, that 
by incorporating the Commission's definition of ``public 
communication'' it improperly excluded all Internet communications, and 
second, for lack of notice to the public that the definition would be 
limited to ``public communications'' as defined in 11 CFR 100.26. The 
Commission did not appeal these holdings.
    The Commission is addressing the Shays District court's first 
concern by revising the definition of ``public communication'' to 
include paid advertisements placed on another person's Web site, as 
explained above. The Commission has addressed the Shays District 
court's second concern by providing ample notice in the NPRM that it 
was considering defining ``generic campaign activity'' in terms of a 
``public communication.'' Therefore, the Commission is adopting a final 
rule that has the same language as the previous rule and the rule 
proposed in the NPRM.
    Two commenters addressed the Commission's proposal to retain the 
current definition of ``generic campaign activity.'' Both commenters 
urged the Commission to adopt a definition that includes activities 
beyond ``public communications.'' One commenter suggested that the 
proposed definition of the term ``generic campaign activity'' would 
improperly narrow the application of the term, thereby permitting 
State, district, and local party committees to use non-Federal funds 
for many activities that promote the political party (and thereby 
indirectly promote the party's Federal candidates) because the 
promotion does not occur in a ``public communication.'' Specifically, 
this commenter urged the Commission to adopt a broader definition, one 
covering ``all generic ``activities' '' of State, district, and local 
political party committees, such as phone banks and mailings to 500 or 
fewer people, and State, district, and local political party Web sites.
    The Commission does not believe that expanding the definition of 
``generic campaign activity'' beyond ``public communication'' is a 
sound policy decision or the result required by the Act. First, the 
Commission has not seen any evidence that its 2002 definition of 
``generic campaign activity'' has led to circumvention of the Act or 
fostered corruption or the appearance thereof,

[[Page 18599]]

nor did the commenters point to any specific real-world examples where 
the definition of ``generic campaign activity'' has proven too narrow. 
Second, a broad definition of ``generic campaign activity'' would 
exceed the scope of the Act and pose Constitutional concerns by 
capturing State, district, and local party activities designed to 
support only State or local candidates, thereby improperly requiring 
that State, district, and local parties finance these activities with 
at least some Federal funds. For example, a State party committee that 
rents a bus to transport the party's slate of candidates for the 
State's executive offices during a State election occurring 
contemporaneously with a Federal election, would be required to use 
Federal funds or a mix of Federal and Levin funds to pay for the bus 
because providing the bus would constitute support of the party and its 
choice of candidates without clearly identifying any of the candidates. 
The Commission does not consider these results to be required by the 
Act.
    The commenters also argued that the use of the term ``public 
communication'' creates a definition of ``generic campaign activity'' 
that is too narrow because it does not cover all communications, 
specifically ``mailing and phone banks directed to fewer than 500 [sic] 
people.'' The plaintiffs in Shays District made this same argument. The 
Commission countered that under such an argument, a series of 
substantially similar telephone calls made to 500 or fewer persons 
could be regulated as FEA if they promote a political party, even if 
they do not mention Federal candidates, whereas the same number of 
substantially similar telephone calls that do promote or oppose a 
specific Federal candidate would not be regulated as FEA.\39\ The Shays 
District court specifically rejected the plaintiff's argument and 
agreed with the Commission's reasoning, stating: ``It would indeed be 
anomalous for Congress to have placed greater strictures on activities 
that promote political parties than on activities that support or 
attack a candidate.'' Shays District at 111. Accordingly, the Shays 
District court found that the Commission's definition of ``generic 
campaign activity'' was appropriate and reasonable in the context of 
FEA, particularly in excluding activities such as small phone banks and 
mailings. Id.
---------------------------------------------------------------------------

    \39\ A telephone bank that supports or opposes a Federal 
candidate would be regulated as an additional form of FEA, which is 
a ``public communication'' that PASOs a clearly identified Federal 
candidate. 2 U.S.C. 431(20(A)(iii); 11 CFR 100.24(b)(3).
---------------------------------------------------------------------------

    Therefore, the Commission has decided to retain the current 
definition of ``generic campaign activity'' at 11 CFR 100.25. The final 
rule is unchanged from the language proposed in the NPRM. ``Generic 
campaign activity'' will continue to mean a ``public communication,'' 
as defined in 11 CFR 100.26, that promotes or opposes a political party 
and does not promote or oppose a clearly identified Federal or non-
Federal candidate.

V. 11 CFR 109.21 and 109.37--Definitions of Coordinated Communications 
and Party Coordinated Communications

    To be a ``coordinated communication'' or a ``party coordinated 
communication,'' a communication must be a ``public communication'' as 
defined in 11 CFR 100.26.\40\ See 11 CFR 109.21(c) and 11 CFR 
109.37(a)(2). In Shays District, the court rejected the definition of 
the term ``public communication,'' because the effect of the definition 
was to exclude all Internet communications from the reach of the 
coordinated communication rules. See Shays District at 70.\41\
---------------------------------------------------------------------------

    \40\ As noted above, an ``electioneering communication'' may 
also be a coordinated communication. See 2 U.S.C. 441a(a)7)(C); 11 
CFR 109.21(c)(1). However, ``electioneering communications'' are a 
subset of ``public communications.''
    \41\ The Court of Appeals found that the Commission had provided 
inadequate justification under the APA for excluding from the 
coordinated communication rules certain ``public communications'' 
that are publicly distributed or otherwise publicly disseminated 
more than 120 days before an election. See Shays Appeal at 100. The 
Commission initiated a separate rulemaking on the coordinated 
communication rules to address that issue. See Coordinated 
Communication Notice of Proposed Rulemaking, 70 FR 73946 (Dec. 14, 
2005). The Shays Appeal decision did not address the definition of 
``public communication.''
---------------------------------------------------------------------------

    By including Internet advertising placed for a fee on another 
person's website in the definition of ``public communication'' in 11 
CFR 100.26, the Commission is addressing the deficiency identified by 
the Shays District court in the coordinated communication rules. 
Consequently, the Commission is not amending the language of the 
coordinated communication rules in this rulemaking.
    In the NPRM, the Commission did not propose any changes to the 
coordinated communication rule or the party coordinated communication 
rule. The Commission did, however, invite comments on a number of 
issues with respect to the two rules. The comments that the Commission 
received generally supported the Commission's decision to reconsider 
the coordinated communication rules in a separate rulemaking dedicated 
to that purpose.

A. In-Kind Contributions

    The Commission would also like to reiterate that current 
regulations at 11 CFR 100.52(d)(1) make clear that the provision of 
goods or services ``without charge or at a charge that is less than the 
usual or normal charge for such goods or services'' is a contribution. 
The Commission does not view the ``public communication'' rule it is 
promulgating to permit vendors who normally charge for advertising 
space to provide such advertising space at a reduced charge or free of 
charge without making a contribution.
    While the Commission recognizes that online business practices for 
the charging of advertising space vary greatly from one website to the 
next, the Commission would also like to make clear that when the 
customary business practice of a particular website regarding the 
payment for space is not followed, the vendor is making an in-kind 
contribution. This is similarly the case when any organization 
transfers to a political committee a tangible asset, such as an e-mail 
list. There is no need to show that a coordinated communication 
resulted from such a transfer for the actual asset to be an in-kind 
contribution to that committee.

B. Republication of Campaign Materials

    The Commission sought comment about the republication of candidate 
campaign materials on the Internet. Under the existing coordinated 
communication rules, the content prong can be satisfied by 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.'' 11 CFR 
109.21(c)(2). Several commenters urged the Commission to ensure that 
the republication of content from a candidate's website, or the 
republication of other campaign materials prepared by candidate, would 
not result in a ``coordinated communication'' when the republication 
occurs on a blogger's or individual's own website.
    Testimony submitted during the rulemaking indicated that the 
approach outlined in the NPRM would be appropriate. As one of the 
lawyers for the Plaintiffs in the Shays litigation pointed out, the 
restrictions on republication of campaign materials were not 
promulgated with the Internet in mind. Because an individual need

[[Page 18600]]

not incur any cost in downloading information derived from a 
candidate's website and reproducing that same information on a 
different website, republication on the Internet is fundamentally 
different from republication in other contexts, such as if an 
individual were to pay to reprint a candidate's campaign literature.
    The revision to the definition of ``public communication'' in 11 
CFR 100.26 adequately addresses those commenters' concerns, so no 
changes are required to the definition of ``coordinated 
communication.'' The definition of ``public communication'' does not 
encompass any content, including republished campaign material, that a 
person places on his or her own website. Therefore, a person's 
republication of a candidate's campaign materials on his or her own 
website, blog, or e-mail cannot constitute a ``coordinated 
communication.''
    The Commission is taking this approach partly in recognition of the 
ease with which individuals are able to transmit information over the 
Internet. Exchanging hyperlinks, forwarding e-mail, and attaching 
downloaded PDF files are common ways most individuals who use the 
Internet exchange information. The Commission is taking this 
opportunity to make clear that such activity would not constitute in-
kind contributions. 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.'' \42\
---------------------------------------------------------------------------

    \42\ Senator Russ Feingold, ``Blogs Don't Need Big Government'' 
available at http://www.mydd.com/story/2005/3/10/112323/534 (last 
visited 3/24/06).
---------------------------------------------------------------------------

    However, if a person pays to republish a candidate's campaign 
materials on another person's website, a ``public communication'' would 
result under revised 11 CFR 100.26, and such paid republication would 
therefore satisfy the content prong of the three-pronged ``coordinated 
communication'' test. For example, if a candidate pays to place a 
banner advertisement on the WashingtonPost.com homepage for one week, 
and then a different person pays the WashingtonPost.com for the 
continued display of the same advertisement for an additional week, the 
content prong of the ``coordinated communication'' test would be 
satisfied. The Commission notes, however, that satisfaction of the 
content prong does not, in and of itself, translate into a coordinated 
communication finding. The conduct prong must also be satisfied. See 11 
CFR 109.21(d).
    The Commission also notes that this provision does not supersede 
the limitations and prohibitions placed on disbursements for 
communications by corporations and labor organizations under 2 U.S.C. 
441b and 11 CFR Part 114.

VI. 11 CFR 110.11--Scope of Disclaimer Requirements

    The Commission's disclaimer rules promulgated in 2002 apply to 
``public communications,'' as defined in 11 CFR 100.26, as well as to 
two specified additional types of Internet communications: unsolicited 
electronic mail of more than 500 substantially similar communications 
and Internet websites of political committees available to the general 
public. See 11 CFR 110.11(a); see also 2 U.S.C. 441d(a).
    Whether a ``public communication'' requires a disclaimer depends on 
who makes the ``public communication'' and what the ``public 
communication'' says. Under the 2002 rule, a political committee must 
include a disclaimer on any ``public communication'' for which it makes 
a disbursement, as well as on all of its publicly available websites 
and on all substantially similar, unsolicited e-mail communications to 
more than 500 people. See 11 CFR 110.11(a)(1). Under the 2002 rule, 
when persons other than political committees make a ``public 
communication'' or send substantially similar e-mail messages to more 
than 500 persons, they need only include disclaimers when those 
communications expressly advocate the election or defeat of a clearly 
identified candidate for Federal office, solicit contributions, or 
qualify as ``electioneering communications'' under 11 CFR 100.29. See 
11 CFR 110.11(a)(2)-(4). Persons other than political committees are 
not required to include disclaimers on their websites.

A. Disclaimer Requirements for Websites

    Although the disclaimer rule was not at issue in Shays, the 
Commission noted in the NPRM that because a disclaimer is required for 
a certain class of ``public communication'' as defined in 11 CFR 
100.26, the revision to the definition of ``public communication'' in 
11 CFR 100.26 would affect the scope of the disclaimer requirement. The 
Commission received several comments stating that it would be 
appropriate to require disclaimers for certain ``public 
communications'' that take place over the Internet, provided that the 
definition of ``public communication'' was limited to advertisements 
placed for a fee on another person's website as proposed in the NPRM.
    Moreover, Congress has required disclaimers for all forms of 
``general public political advertising'' that contain certain content 
or are paid for by a political committee. 2 U.S.C. 441d(a). As the 
Commission explained in its original post-BCRA disclaimer rulemaking, 
the use of the same catch-all phrase in the definition of ``public 
communication'' and the disclaimer requirements ``should be interpreted 
in a virtually identical manner.'' \43\ See 2 U.S.C. 441d(a) and 
431(22). The Commission is therefore retaining the disclaimer 
requirement for any ``public communication'' that includes the content 
specified in 11 CFR 110.11(a).
---------------------------------------------------------------------------

    \43\ See Disclaimer Final Rules, 67 FR at 76963.
---------------------------------------------------------------------------

    In their comments, the Congressional sponsors of BCRA urged the 
Commission to retain the current additional requirement that all 
political committee websites include disclaimers. The Commission did 
not receive any other comments specifically addressing the disclaimer 
requirement for political committee websites, and did not propose 
changing that requirement in the NPRM. Accordingly, under the revised 
rules at 11 CRR 110.11, all political committee websites must continue 
to include the appropriate disclaimer statements.
    This treatment of political committee websites is consistent with 
Congress's broader disclaimer requirements for political committees. In 
2 U.S.C. 441d(a), Congress required a disclaimer ``[w]henever a 
political committee makes a disbursement'' for a class of 
communications, regardless of the content of the communication. In 
contrast, for all other persons, Congress only required a disclaimer if 
the communication contains specific content, such as a solicitation of 
contributions or a message expressly advocating the election or defeat 
of a clearly identified candidate for Federal office. Id.

B. No Disclaimer Required for Electronic Mail Unless Sent by a 
Political Committee

    In the NPRM, the Commission proposed changing the disclaimer 
requirement for e-mail communications. The Commission noted that it had 
originally promulgated the regulatory requirement that disclaimers 
appear on large quantities of e-mail communications in an effort to 
focus on

[[Page 18601]]

``spam'' e-mail.\44\ NPRM at 16972. The Commission also stated that it 
had become ``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.'' 
Id. In addition, the Commission was concerned ``that the lack of a 
definition of 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.'' Id. Accordingly, while proposing to maintain the 
requirement that a disclaimer appear on more than 500 substantially 
similar unsolicited e-mail communications, the Commission proposed 
defining the term ``unsolicited e-mail'' as e-mail ``sent to electronic 
mail addresses purchased from a third party.'' Id.
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    \44\ ``Spam'' is a common term for ``bulk e-mail sent out over 
the Internet. These messages are often unsolicited and unwanted by 
the recipient.'' Modern Dictionary for the Legal Profession, 866 
(3rd ed. 2001).
---------------------------------------------------------------------------

    The commenters had mixed reactions to the Commission's proposal. 
Although they generally supported limiting the disclaimer requirement 
for e-mail communications to e-mail communications sent to a purchased 
or rented list, many commenters raised concerns about the proposed 
definition of ``unsolicited e-mail.'' One commenter asserted that the 
proposed definition would be confusing, because it differed from the 
commonly accepted meaning of the term ``unsolicited e-mail,'' which is 
not limited to e-mail communications sent to addresses purchased from a 
third party. A second commenter felt that the proposed definition was 
too narrow, and urged the Commission to expand it to include 
communications sent to an e-mail list provided by a candidate or 
political committee, regardless of whether the list was provided as 
part of a commercial transaction. A third commenter felt that the 
proposed definition was too broad, and urged the Commission not to 
require disclaimers on e-mail involving less than some minimum cost. A 
fourth commenter felt that the Commission should not attempt to 
regulate unsolicited e-mail at all, because of the lack of evidence 
that political e-mail was ``a tool of big money'' or otherwise harmful, 
while a fifth commenter urged the Commission to require disclaimers on 
all e-mail sent by any candidate, political party committee, political 
committee, or third party who ``paid to send electioneering e-mail.''
    Commenters also raised concerns about the quantity threshold (ie., 
``more than 500'') for e-mail communications to trigger the disclaimer 
requirement. Although one commenter supported maintaining a numerical 
threshold to serve as a ``bright line rule,'' another suggested 
eliminating the threshold entirely and requiring disclaimers on e-mail 
sent to any address that had been purchased for the purpose of engaging 
in ``political spam,'' regardless of the number involved. Still others 
urged the Commission to replace the quantity threshold with a monetary 
threshold; suggestions for the monetary threshold ranged from $250 to 
$25,000 in expenditures for e-mail communications.
    Several commenters voiced concerns about implementing the 
Commission's proposal. One commenter, for example, raised the issue of 
whether disclaimers would be permanently required for any e-mail 
communication sent to addresses originally acquired through a 
commercial transaction. Noting that his and other organizations often 
rented lists of e-mail addresses, the commenter asked, ``Does that mean 
that four months down the line, when we've been having ongoing 
communication [with a person whose e-mail address was on the rented 
list,] that because we rented the list originally, and the name was 
produced through a rented list[,] that * * * we have to put a 
disclaimer on e-mail to [that person]?'' The commenter also noted that 
the proposed rule could raise recordkeeping issues for organizations 
that obtain e-mail addresses through a combination of purchase or 
rental and other means.
    Commenters also raised concerns about enforcing the disclaimer 
requirement on e-mail, particularly given the high volume of e-mail 
traffic and the low cost of sending large numbers of e-mail 
communications. In addition, some commenters questioned the 
Commission's rationale for requiring individuals to place disclaimers 
on unsolicited e-mail communications containing express advocacy or 
soliciting contributions, but not to require disclaimers on Internet 
blogs containing the same message. Several commenters suggested that 
the Commission simply eliminate the disclaimer requirement for e-mail 
communications.
    The Commission agrees with some of the concerns expressed by the 
commenters and has decided to change 11 CFR 110.11(a) by eliminating 
the requirement that disclaimers appear on e-mail communications by 
persons other than political committees.\45\ The Act does not expressly 
or implicitly require that disclaimers appear on e-mail communications. 
Congress used virtually the same language in the disclaimer provisions 
and in the definition of ``public communication,'' particularly with 
respect to the phrase ``or any other [type/form] of general public 
political advertising,'' and the Commission has previously concluded 
that the two phrases ``should be interpreted in a virtually identical 
manner.'' See 2 U.S.C. 441d(a) and 431(22); Disclaimer Final Rules at 
76963. As discussed above, the Commission is changing the definition of 
``public communication'' to reflect the Commission's conclusion that 
the only form of ``public communication'' on the Internet is 
advertising that appears for a fee on another person's Web site. See 
Part III, above.
---------------------------------------------------------------------------

    \45\ See note 22 for the definition of ``person.''
---------------------------------------------------------------------------

    A political committee, however, must continue to include a 
disclaimer whenever it sends more than 500 substantially similar e-mail 
communications. As noted above, Congress requires disclaimers on a 
broader class of communications for political committee than for all 
other persons. Since 2002, the Commission has required disclaimers for 
``unsolicited electronic mail of more than 500 substantially similar 
communications.'' 11 CFR 110.11(a). The Commission notes that political 
committees have generally complied with this requirement, and that the 
inclusion of a disclaimer statement poses only a minimal burden for 
political committees. Also, the Commission is not aware of significant 
concerns that might warrant the removal of this requirement for 
political committees at this time. However, in light of confusion that 
many commenters expressed regarding the meaning of ``unsolicited e-
mail,'' the Commission is removing the requirement that e-mail be 
``unsolicited.''
    The Commission notes that e-mail communications by corporations and 
labor organizations are otherwise regulated by 11 CFR Part 114. See 2 
U.S.C. 441b and 11 CFR 114.4. Generally, these entities are prohibited 
from sending e-mail in connection with Federal elections outside their 
restricted class. 2 U.S.C. 441b and 11 CFR 114.4.

C. Technical Reorganization

    The Commission is making two other changes to 11 CFR 110.11(a) for 
purposes of clarity. First, the Commission is deleting the first

[[Page 18602]]

sentence from paragraph (a). Second, the remaining sentence in that 
paragraph is being revised to provide that disclaimers are required 
only on: (1) A ``public communication,'' as defined in 11 CFR 100.26, 
made by a political committee; (2) electronic mail of more than 500 
substantially similar communications when sent by a political 
committee; (3) a political committee website available to the general 
public; and (4) a ``public communication,'' as defined in 11 CFR 
100.26, made by any person that contains express advocacy, solicits a 
contribution, or qualifies as an ``electioneering communication'' under 
11 CFR 100.29.

D. Bloggers Paid by Candidates

    The Commission invited comments on whether it should revise the 
disclaimer rule in 11 CFR 110.11(a) to require bloggers to disclose 
payments from a candidate, a political party, or a political committee. 
The Commission did not propose any change because current Commission 
rules at 11 CFR 110.11(a) already require a political committee to 
disclose this type of disbursement on its publicly available reports 
filed with the Commission. NPRM at 16973.
    All but one of the comments received on this subject supported the 
Commission's proposed approach that would not require bloggers to 
disclose payments received from candidates. Typical of the reaction was 
this comment: ``The ethics of taking money to express opinions without 
disclosing those payments can certainly be questioned. But for purposes 
of the election laws, * * * no disclaimer should be required. Payments 
by campaigns are disclosed by campaigns. To require more of bloggers 
when others who receive payments from campaigns are not subject to 
similar disclosure requirements would not be fair.''
    The Commission agrees that the Act does not require a disclaimer 
when a blogger or other person accepts payment from a Federal 
candidate. Accordingly, it is not changing the disclaimer rule to 
require bloggers to disclose payments from a candidate, a political 
party committee, or other political committee. Please note, however, 
that disbursements for particular communications, as opposed to more 
generalized payments to bloggers for consulting or other services, 
might still require disclaimers. For example, if a candidate or 
political committee pays a fee to place an advertisement on the website 
of a blogger, the advertisement would require a disclaimer because it 
would be a disbursement for a ``public communication'' by a political 
committee.

VII. Other Uses of the Term ``Public Communication'' in the 
Commission's Regulations

    The term ``public communication'' is also used in 11 CFR 106.6(b) 
and (f) (allocation of expenses between Federal and non-Federal 
activities by SSFs and nonconnected committees) and 11 CFR 300.2(b)(4) 
(definition of ``agent'' for non-Federal candidates). Thus, the 
revisions to the definition of ``public communication'' in amended 11 
CFR 100.26 affect the application of these two regulations.

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

    In 2004, the Commission revised its allocation regulations at 11 
CFR 106.6 governing the source of funds for certain ``public 
communications'' by SSFs and nonconnected committees. Whenever either 
of these entities pays for a ``public communication'' that (1) refers 
to a political party, but does not refer to any clearly identified 
Federal or non-Federal candidate, or (2) refers to one or more clearly 
identified Federal candidates, the SSF or nonconnected committee must 
pay for the communication entirely with Federal funds or by allocating 
such expenses between its Federal and non-Federal accounts in 
accordance with 11 CFR 106.6(b) and (f). See Political Committee Status 
Final Rules. Because all Internet communications were exempted from the 
definition of ``public communication,'' SSFs and nonconnected 
committees were not required to comply with the new provisions in 11 
CFR 106.6 when funding Internet communications.
    In the NPRM, the Commission noted that the effect of the proposed 
revisions to the definition of ``public communication'' in 11 CFR 
100.26 would be to apply the allocation rules in 11 CFR 106.6(b)(1), 
(b)(2), and (f) to those Internet communications covered by the revised 
definition of ``public communication.'' Thus, SSFs and nonconnected 
committees would be required to use Federal funds to pay for certain 
``public communications'' over the Internet. The Commission invited 
comment on this result.
    The Commission received two comments addressing this issue. Both 
urged the Commission not to apply the allocation rules in section 106.6 
to communications over the Internet. Both comments expressed concern 
about whether it would be feasible to ascertain the costs of the 
communications to which the allocation rules would apply.
    Because the revised definition of ``public communication'' covers 
only paid Internet advertising placed on another person's website, and 
application of the section 106.6 allocation rules to these 
communications will be based on readily determinable costs, the 
commenters' concerns are resolved by the new definition in 11 CFR 
100.26. The cost of Internet advertising included within the revised 
definition of ``public communication'' will be as discrete and readily 
identifiable as the costs of other ``public communications,'' and 
application of the section 106.6 allocation rules to these Internet 
communications will therefore not be any more complex than for other 
forms of communication covered in the definition of ``public 
communication.'' Moreover, the costs of paid Internet advertising must 
be allocated under 11 CFR 106.6 only if the SSF's or nonconnected 
committee's advertising refers to a political party or a clearly 
identified Federal candidate.
    Therefore, the Commission is not amending the language of the 
allocation rules in 11 CFR 106.6. All SSFs and nonconnected committees 
must continue to use Federal funds to pay for all covered forms of 
``public communication,'' which now also includes paid Internet 
advertising placed on another person's website.

B. 11 CFR 300.2(b)(4)--Definition of an ``Agent'' of State and Local 
Candidates

    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'' of a 
candidate for State or local office is a person who has actual 
authority conferred by that candidate to ``spend funds for a public 
communication,'' as defined in 11 CFR 100.26. 11 CFR 300.2(b)(4).
    In the NPRM, the Commission sought comment on whether further 
revisions to the definition of ``public communication'' are necessary 
to address its potential effect on the definition of ``agent'' in 11 
CFR 300.2(b)(4). Specifically, the Commission noted that 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 candidate to pay for any Internet communication that 
is included within the revised definition of ``public

[[Page 18603]]

communication.'' The Commission received no comments on this issue.
    The Commission believes that no further revisions to the definition 
of ``agent'' in 11 CFR 300.2(b)(4) are necessary to address the effect 
of the revised definition of ``public communication'' in 11 CFR 100.26. 
The definition of ``agent'' was based on the anticipated scope of a 
principal's activities. Now that the principal (i.e., a State or local 
candidate) is subject to certain restrictions when making one type of 
Internet communication, it follows that a corresponding change to the 
scope of the agent's anticipated activities is consistent with the 
original purpose of the definition of ``agent.'' Therefore, a person 
will continue to be an agent of a State or local candidate if he or she 
has actual authority to pay for a ``public communication'' on behalf of 
the candidate, which now includes paid Internet advertising placed on 
another person's website.

VIII. 11 CFR 100.94 and 100.155--Exceptions to the Definitions of 
``Contribution'' and ``Expenditure'' for Internet Activity by 
Individuals

    The Act and Commission regulations currently exempt certain 
activities by individuals from the definitions of ``contribution'' and 
``expenditure.'' See 2 U.S.C. 431(8)(B)(i) and (ii); 11 CFR 100.74-
100.76 and 100.135-100.136. For example, ``the value of services 
provided without compensation by any individual who volunteers on 
behalf of a candidate or political committee'' is not a 
``contribution'' to the candidate or political committee. 2 U.S.C. 
431(8)(B)(i); 11 CFR 100.74. Similarly, ``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'' is not a 
``contribution'' or ``expenditure.'' 2 U.S.C. 431(8)(B)(ii). See also 
11 CFR 100.35, 100.36, 100.75, and 100.76.
    The Internet has changed the way in which individuals engage in 
political activity by expanding the opportunities for them to 
participate in campaigns and grassroots activities at little or no cost 
and from remote locations. Accordingly, in the NPRM, the Commission 
proposed new rules to extend explicitly the existing individual 
activity exceptions to the Internet to remove any potential 
restrictions on the ability of individuals to use the Internet as a 
generally free or low-cost means of civic engagement and political 
advocacy. See NPRM at 16975-76. Specifically, the Commission proposed 
two sections, 11 CFR 100.94 and 100.155, to exempt from the definitions 
of ``contribution'' and ``expenditure'' the value of uncompensated 
Internet activity by volunteers.
    All of the numerous commenters addressing this issue supported the 
Commission's proposal and favored a broad exemption from regulation for 
uncompensated Internet activity by individuals. The commenters affirmed 
that individuals currently use the Internet to engage in both 
individual and collective grassroots political activity. As one 
commenter stated, ``[t]he Internet provides individuals with the 
ability to engage in widely disseminative political discourse without 
requiring the expenditure of large sums of money.'' Another commenter 
stated that campaigns in the 2004 election cycle ``relied to an 
unprecedented degree on using the Internet as an organizing tool, both 
financially as well as [for] an unprecedented number of volunteers who 
came to the campaign through the Internet.'' This commenter noted that 
``[p]eople who volunteered through the Internet * * * were volunteering 
not because they thought they were going to get some job in the 
administration, not because they wanted to be close to the center of 
action * * * [but] because they wanted to make a difference.'' A 
different commenter suggested that ``[i]ndividual Americans should be 
able to engage in election related political speech online and spend 
reasonable sums of their own money to support that speech, without 
having to disclose their identity, worrying about whether they are 
violating campaign finance laws, or having to hire a lawyer to advise 
them.''
    One commenter summarized the general benefit to be derived from the 
proposed exceptions: ``[a]doption of this rule would in itself address 
the vast majority of concerns and objections that have been expressed 
about this rulemaking. This rule would make clear, appropriately so, 
that individuals engaging in unfettered political discourse over the 
Internet using their own computer facilities (or those publicly 
available) would not be subject to regulation under the campaign 
finance laws, whether or not such activities are coordinated with a 
candidate.''
    After considering all the comments, the Commission is adding new 11 
CFR 100.94 and 100.155, which together expressly remove Internet 
activity by an individual or group of individuals from the definitions 
of ``contribution'' and ``expenditure'' when the individual or group of 
individuals perform uncompensated Internet activities for the purpose 
of influencing a Federal election.

A. 11 CFR 100.94(a) and 100.155(a)--Exception for Uncompensated 
Internet Activity

    Although the final versions of 11 CFR 100.94 and 100.155 are 
structured somewhat differently from the rules proposed in the NPRM, 
they have the same scope and application. Thus, under these final 
rules, any individual or group of individuals who, without 
compensation, uses Internet equipment and services for the purpose of 
influencing a Federal election does not make a contribution or 
expenditure and does not incur any reporting responsibilities as a 
result of that activity.
1. Exception Not Restricted to Volunteers Known to a Campaign
    In the NPRM, the Commission sought comment on whether the final 
rules should apply to all individual Internet activities, regardless of 
whether such activities are known to a candidate, authorized committee, 
or political party committee. The Commission proposed regulations that 
would apply regardless of whether the individual's Internet activities 
were known to any of these groups. All commenters addressing this issue 
supported the Commission's proposal. As one commenter stated, ``[f]or 
the sake of clarity, the rule should apply to all `individuals,' 
whether or not they are `volunteers' for a campaign that are `known' to 
the campaign, or employees of a campaign.''
    The Act does not require that a candidate or political committee 
formally recognize an individual as a ``volunteer'' for that 
individual's activities to be exempt from the definitions of 
``contribution'' and ``expenditure.'' On the contrary, the plain 
language of the Act uses the term ``volunteer'' as relating to the 
provision of voluntary and uncompensated services, rather than to the 
formal status of the actor in relation to a campaign. See 2 U.S.C. 
431(8)(B)(i) (exempting from the definition of ``contribution'' ``the 
value of services provided without compensation by an individual who 
volunteers'') and 2 U.S.C. 431(8)(B)(ii) (exempting from the definition 
of ``contribution'' ``the use of real or personal property * * * 
voluntarily provided by an individual to any candidate or any political 
committee of

[[Page 18604]]

a political party in rendering voluntary personal services''). 
Moreover, one commenter pointed out that, in light of the new 
opportunities to engage in political activity through the Internet, 
``it would be an odd result if a campaign volunteer was exempt but 
someone acting independently was not.''
    The Commission agrees. Therefore, the new rules exempt Internet 
activity by individuals acting both with and without the knowledge or 
consent of a candidate, authorized committee, or political party 
committee. The new rules use the phrase ``acting independently'' to 
cover any individual who is unknown to, or acting without the consent 
of, a candidate, authorized committee, or political party, and the 
phrase ``in coordination with'' to cover any individual who is a formal 
or informal volunteer known to, and acting with the consent of, a 
candidate, authorized committee or political party committee.\46\
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    \46\ In Advisory Opinion 1999-17 (George W. Bush for President 
Exploratory Committee), the Commission concluded that a campaign's 
permission ``at some level'' was essential for the volunteer 
exception to apply to an individual's Internet activity on behalf of 
a presidential candidate. Advisory Opinion 1999-17 is superseded to 
the extent that it indicates that the campaign or political 
committee must be aware of or sanction the individual's Internet 
activities in order for the individual's activity to be exempt.
---------------------------------------------------------------------------

    Finally, commenters raised concerns that the new rules would not 
apply to groups of individuals who act collectively. One commenter 
pointed out that, ``While it is true that any `group' comprises 
individuals, the plain reading of the [proposed] rule suggests that 
only individuals acting `individually' are protected from regulation of 
`contributions' or `expenditure.' ''
    In response to this concern, the Commission in the final rules uses 
the terms ``individual or group of individuals.'' Individuals are 
eligible for the exceptions whenever they engage in Internet activities 
for the purpose of influencing a Federal election alone or collectively 
as a group of individuals. For example, if several individuals share 
the responsibilities of operating a blog or other website, then each 
individual would be covered under new 11 CFR 100.94 and 100.155. The 
Commission also notes that a group of individuals will not trigger 
political committee status through Internet activities covered by the 
new exceptions because those Internet activities would not constitute 
contributions or expenditures under the Act.\47\
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    \47\ See 11 CFR 100.5 (``Political committee means * * * any 
committee, club, association, or other group of persons which 
receives contributions aggregating in excess of $1,000 or which 
makes expenditures aggregating in excess of $1,000 during a calendar 
year''). As discussed below, payments to place advertisements on 
another person's website, other than for a nominal fee, are not 
exempt under the new exceptions for Internet activities by 
individuals, and such payments could result in expenditures or 
contributions.
---------------------------------------------------------------------------

2. Republication
    In the NPRM, the Commission noted that its proposed regulations 
would protect an individual or volunteer who produces or maintains a 
website or blog, or conducts other grassroots activity on the Internet. 
The NPRM noted that this activity would not result in individuals or 
volunteers making a contribution or expenditure and they would not 
incur any reporting responsibilities. For example, if an individual 
downloaded materials from a candidate or party website, such as 
campaign packets, yard signs, or any other items, the downloading of 
such items would not constitute republication of campaign materials.
    Even if this activity is done 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 reporting responsibilities. 
Additionally, 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 has chosen to adopt such an approach in the final rules. In 
doing so, the Commission recognizes the importance of grassroots 
activity and the role of the Internet. Under the final rules at 11 CFR 
100.94 and 100.155, individuals are free to republish materials using 
the Internet without making a contribution or expenditure. However, the 
Commission notes that 11 CFR 100.94(e) would not exempt from the 
definition of ``contribution'' any ``public communication'' that arises 
as the result of the republication of such materials. For example, if 
an individual downloaded a campaign poster from the Internet and then 
paid to have the poster appear as an advertisement in the New York 
Times, the advertisement in the New York Times would not be within the 
exemption of the final rules.
3. Personal Services Exempted
    As was noted above, the Act and Commission regulations exempt 
certain activities by individuals from the definitions of 
``contribution'' and ``expenditure.'' See 2 U.S.C. 431(8)(B)(i) and 
(ii); 11 CFR 100.74-100.76 and 100.135-100.136. For example, the Act 
provides that ``the value of services provided without compensation by 
any individual who volunteers on behalf of a candidate or political 
committee'' is not a ``contribution'' to the candidate or political 
committee. 2 U.S.C. 431(8)(B)(i). See also 11 CFR 100.74. Consistent 
with these provisions, the narrative accompanying the exceptions 
proposed in the NPRM made clear that the value of an individual's 
uncompensated Internet services would be excepted from the definitions 
of ``contribution'' and ``expenditure.'' See NPRM at 16976. 
Accordingly, under new 11 CFR 100.94 and 100.155, the value of an 
individual's uncompensated time and the value of any special skills 
that individuals may bring to bear on their Internet activities are 
exempt from the definitions of ``contribution'' and ``expenditure.''
4. Individual Services Must Be Uncompensated
    The Commission sought comments, but received none, on whether an 
exception for individual Internet activity should be extended to 
individuals who receive some form of payment for their Internet 
services from a candidate or a political committee. The Commission 
notes that the Act and Commission regulations exempt only ``services 
provided without compensation'' from the definitions of 
``contribution.'' 2 U.S.C. 431(8)(B)(i); 11 CFR 100.74 (emphasis 
added). Likewise, the proposed rule limited the new exceptions to 
uncompensated services.
    Accordingly, these final rules exempt only those Internet services 
for which an individual does not receive any compensation. Campaign 
employees, for example, are not eligible for the exceptions in 11 CFR 
100.94 and 100.155 for activities for which they are compensated. 
However, campaign employees are still within this exemption when they 
engage in uncompensated Internet activities. Moreover, bloggers would 
not lose eligibility for the exceptions by selling advertising space to 
defray the operating costs of the blog, but would not be eligible for 
the exceptions for campaign work for which the blogger is compensated 
by a campaign committee or any other political committee. For example, 
if a political committee pays a blogger to write a message and post it 
within his or her blog entry, the resulting blog entry would not be 
exempted as ``uncompensated Internet activity.'' While not exempted 
under the final rules, such a payment to the blogger would not 
otherwise restrict the blogger's activities or create an obligation on 
the part of the blogger to

[[Page 18605]]

report the payment. The expenditure by the political committee is akin 
to a vendor payment, which the political committee must report to the 
Commission. Similarly, if a campaign pays a blogger for technical 
consulting services regarding the campaign's website, the blogger's 
activities on his or her own blog would remain eligible for the 
exceptions in 11 CFR 100.94 and 100.155.
    If a campaign committee or other political committee reimburses an 
individual for any out-of-pocket costs that the individual may incur in 
performing Internet activities, such reimbursements do not constitute 
compensation under the final rules. Accordingly, individuals may be 
reimbursed by political committees for any out-of-pocket expenses they 
incur in performing Internet activities and remain within the 
exemptions in 11 CFR 100.94 and 100.155. If a political committee pays 
the costs of setting up a website or controls the overall content, 
however, the website may need to carry an appropriate disclaimer under 
11 CFR 110.11(a)(1).
5. Individual Internet Activity is Exempt Regardless of Who Owns the 
Computer Equipment and Where the Internet Activities Are Performed
    The proposed rules in the NPRM covered three situations involving 
the use of computer equipment and services by an individual for 
uncompensated Internet activities: (1) The use of computer equipment 
and services that the individual owns; (2) the use of computer 
equipment and services available at a public facility; and (3) the use 
of computer equipment and services on the individual's residential 
premises.
    Some commenters opposed this proposed structure as ``overly lengthy 
and complicated in part because the proposed rule tries to predict how 
and where individuals will be using computers.'' Some of these 
commenters also complained that distinguishing between sources of 
equipment unnecessarily complicated the proposed rules. ``These 
individuals and volunteers should use whatever computer is normally 
available to and used by them,'' stated one commenter. This commenter 
also stated that ``[t]he question is not which computer is used, but 
whether it is used in the course of uncompensated individual and 
volunteer activity.''
    The Commission agrees. Distinguishing between sources of computer 
equipment and locations where the Internet activities occur could lead 
to anomalous results. For instance, the proposed rules may have been 
interpreted to exempt an individual's Internet activity if the 
individual used a neighbor's computer in the individual's own home or 
in an Internet cafe, but not if the individual uses a neighbor's 
computer in the neighbor's home. Additionally, the proposed rules may 
have been interpreted to exempt an individual's Internet activities 
performed at the individual's residence using a computer supplied by 
the individual's employer, but not if the Internet activities were 
performed by the individual at his or her own place of work.
    As this result was not the Commission's intent, the final rules do 
not distinguish between sources of computer equipment nor locations 
where the Internet activities are performed. Under new 11 CFR 100.94 
and 100.155, an individual does not make a contribution or expenditure 
when using equipment or services for uncompensated Internet activities 
for the purpose of influencing a Federal election, regardless of who 
owns such equipment or where the equipment is located. The final rules 
thus avoid disparate treatment of individuals or volunteers who may not 
be able to afford the purchase or maintenance of their own computers 
and websites and explicitly protect individuals who may borrow a 
computer from a friend, neighbor, family member, or anyone else to 
engage in political activity.

B. 11 CFR 100.94(b) and 100.155(b)--Definition of ``Internet 
Activities''

    In the rule proposed in the NPRM, the Commission defined the term 
``Internet activities'' to include ``e-mailing, including forwarding; 
linking, including providing a link or hyperlink to a candidate's, 
authorized committee's or party committee's website; distributing 
banner messages; blogging; and hosting an Internet site.'' NPRM at 
16978.
    The final rules encompass all of the same activity covered by 
proposed 11 CFR 100.94 and 100.155, but also include the phrase ``and 
any other form of communication distributed over the Internet.'' The 
Commission added the phrase ``and any other form of communication 
distributed over the Internet'' to ensure that future advances in 
technology will be encompassed within the final rules. For example, the 
new rules not only cover such things as sending or forwarding 
electronic messages; providing a link or other direct access to any 
person's \48\ Internet site; posting banner messages; and blogging, 
creating, maintaining, or hosting an Internet site; but also cover 
technology that has not yet been developed. Furthermore, the new rules 
cover ``podcasting'' and any other form of Internet communication that 
is, or might be, used for political activity. The Commission notes that 
the new definition of ``Internet activities'' contains an illustrative, 
rather than an exhaustive, list of the activities that are covered.
---------------------------------------------------------------------------

    \48\ See note 22 for the definition of ``person.''
---------------------------------------------------------------------------

C. 11 CFR 100.94(c) and 100.155(c)--Definition of ``Equipment and 
Services''

    The proposed rules focused on exempting an individual's use of 
``computer equipment and services'' for activities on the Internet and 
listed examples of the types of computer equipment and services covered 
by the proposed rules. Specifically, paragraphs (c) of both proposed 11 
CFR 100.94 and 100.155 stated that ``computer equipment and services'' 
includes, but is not limited to, computers, software, Internet domain 
names, and Internet Service Providers (ISP).
    The Commission has adopted the language in the NPRM defining 
``equipment and services'' as including, but not limited to, computers, 
software, Internet domain names, and Internet Service Providers (ISP). 
In response to concerns that the proposed language was technology 
specific, the Commission has added the phrase ``and any other 
technology that is used to provide access to or use of the Internet,'' 
to ensure that future innovations in computer equipment and services 
will be included within the final rules. New sections 100.94 and 
100.155 include, but are not limited to, computers, handheld 
communication devices that provide access to the Internet, software, 
routers, servers, Internet access purchased from an ISP, subscription 
fees, blog hosting services, bandwidth, licensed graphics, domain name 
services, and e-mail services.\49\
---------------------------------------------------------------------------

    \49\ In Advisory Opinion 1998-22 (Leo Smith), the Commission 
concluded that even if an individual acting independently incurs no 
additional costs in creating a website that expressly advocates the 
election or defeat of a clearly identified candidate, at least some 
portion of the underlying costs of creating and maintaining that 
website is an expenditure under the Act and must be reported if it 
exceeds $250 in a calendar year. Later, in Advisory Opinion 1999-17 
(George W. Bush for President Exploratory Committee), the Commission 
concluded that in the course of developing a website for a campaign, 
an individual could use ``his or her personal property at home, 
i.e., a home computer'' and incur ``related costs (such as 
maintaining Internet service with a provider) that are part of the 
upkeep'' of the website without making a contribution or 
expenditure, and without incurring any reporting obligations. 
Advisory Opinion 1998-22 is superseded to the extent that it treated 
as an ``expenditure'' an individual's use of computer equipment and 
services for uncompensated Internet activity.

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[[Page 18606]]

    The Commission notes that while individuals incur no liability for 
using equipment and services in the course of their uncompensated 
political activity, this rule change does not exempt all political 
activity involving the use of technology from regulation. Therefore, 
for example, a political committee's purchase of computers for 
individuals to engage in Internet activities for the purpose of 
influencing a Federal election, remains an ``expenditure'' by the 
political committee. Additionally, a corporation would make a 
prohibited in-kind ``contribution'' and a prohibited ``expenditure'' by 
providing software and Internet access for the specific purpose of 
enabling its employees to influence a Federal election through 
political Internet activities. See 2 U.S.C. 441b(a); 11 CFR 114.2. See 
also discussion of 11 CFR 114.9, below.

D. 11 CFR 100.94(d) and 100.155(d)--Exceptions Applicable to 
Incorporated Bloggers and Similar Corporations

    Corporations and labor organizations are generally prohibited from 
making ``contributions'' or ``expenditures'' in connection with any 
Federal election. 2 U.S.C. 441b. In the NPRM, the Commission sought 
comment on whether bloggers, acting as incorporated or unincorporated 
entities, should still be eligible for the exceptions to the 
definitions of ``contribution'' and ``expenditure.'' NPRM at 16975.
    All commenters who addressed this topic supported exempting 
Internet activity by incorporated bloggers from the definitions of 
``contribution'' and ``expenditure.'' Some commenters observed that 
bloggers often incorporate mainly for tax reasons or to limit their 
liability for the operation of their blogs. ``Every month now, somebody 
threatens to sue me,'' stated one blogger who indicated that the 
popularity of his website and the nature of the political opinions he 
expresses on his blog made it necessary for him to incorporate for his 
own legal protection.
    The Commission agrees that providing an exception that applies to 
all individuals, whether incorporated or unincorporated, is the best 
approach. Therefore, individuals who choose to incorporate are also 
eligible for the new exceptions in 11 CFR 100.94 and 100.155 for 
Internet activities by individuals. Although the activities of some 
incorporated bloggers may also be exempt under the media exemption 
(discussed below), the separate exceptions for individual activity may 
reach some incorporated entities that are not acting within the scope 
of the media exemption or that are not press entities at all. See 2 
U.S.C. 431(9)(B)(i) and 11 CFR 100.73.
    The purposes of the Act would not be furthered by prohibiting 
individuals' Internet activities simply because an individual 
incorporates for liability or tax reasons. The Supreme Court has stated 
that the Act's prohibitions on corporate expenditures and contributions 
arise from ``Congress's concern that organizations that amass great 
wealth in the economic marketplace not gain unfair advantage in the 
political marketplace.'' FEC v. Massachusetts Citizens for Life, 479 
U.S. 238, 263 (1986). The Court acknowledged, however, that ``[s]ome 
corporations have features more akin to voluntary political 
associations than business firms, and therefore should not have to bear 
burdens * * * solely because of their incorporated status.'' Id. The 
Commission concludes that a corporation whose purpose and function is 
to permit an individual to engage in Internet activity is more akin to 
a political association than to a business firm formed to amass wealth, 
and thus should not be subject to the burdens of the prohibitions on 
corporate contributions and expenditures. Thus, the application of the 
new exceptions in sections 100.94 and 100.155 to individuals who choose 
to incorporate for these specific purposes only avoids penalizing 
individuals for using the corporate form merely to limit their personal 
liability.
    Although all commenters who discussed this issue agreed that 
Internet activity by individuals who choose to incorporate should be 
treated the same as Internet activity by unincorporated individuals, 
the commenters disagreed on the scope of such treatment. Some 
commenters noted that the Commission permits political committees to 
incorporate ``for liability purposes only,'' see 11 CFR 114.12, and 
recommended that the exceptions for Internet activities by individuals 
only apply to bloggers who incorporate for liability purposes. However, 
several other commenters asked the Commission to focus on the 
activities of the resulting corporation and their relation to the 
Internet activities that are the subject of the exceptions. 
Specifically, one commenter recommended ``permit[ting] the 
incorporation of small online-only speakers in cases where the business 
of the corporation consists of the operation of a blog or other forum 
for online discourse.'' Other commenters advocated ``an exempt category 
of `blogger corporation' [defined] as an incorporated entity whose 
principal purpose is to conduct blogging activities. Such corporations 
could be treated as individuals for purposes of the campaign finance 
rules applicable to Internet activity.''
    The Commission believes that the best approach to creating an 
exception tailored to individuals engaged in Internet activity who 
choose to incorporate, including bloggers, is to focus on the 
activities of the resulting corporation, rather than delving into the 
reasons for incorporation. The result of such an approach is that an 
individual who engages in Internet activity after incorporating is 
treated the same under the new exceptions as an unincorporated 
individual who engages in similar Internet activity.
    Accordingly, new 11 CFR 100.94(d) and 100.155(d) provide that the 
exceptions in sections 11 CFR 100.94(a) and 100.155(a) apply to a 
corporation that meets three criteria: (1) It is wholly owned by one or 
more individuals; (2) it engages primarily in Internet activities; and 
(3) it does not derive a substantial portion of its revenues from 
sources other than income from its Internet activities. The Commission 
recognizes that incorporated bloggers and other similarly incorporated 
individuals often generate revenue primarily through the sale of 
advertising space on their own websites or through other Internet 
activities, such as providing subscription and membership services, and 
may also generate ancillary revenue from non-advertising sources, such 
as T-shirts, mugs, and similar merchandise. The third requirement is 
therefore added to preserve the exception for such incorporated 
bloggers and similar corporations, without creating an overly broad 
exception to the definitions of ``contribution'' and ``expenditure'' 
that would encompass the activities of any corporation engaged in 
online activities merely as a platform for other commercial activities. 
See, e.g., Advisory Opinion 2004-19 (DollarVote.org) (concerning a for-
profit corporation that provided commercial services to both citizens 
and candidates via DollarVote.org website). The exceptions in 11 CFR 
100.94(d) and 100.155(d) are not limited to blogging activities or any 
other particular Internet activity. Rather, the language in new 
sections 100.94(d) and 100.155(d) ensures that the Internet activities 
of individuals who choose to incorporate are exempt from regulation as 
``contributions'' or ``expenditures,'' regardless of whether the 
individual chooses to ``blog'' or to engage in any other form of 
Internet activity.

[[Page 18607]]

E. 11 CFR 100.94(e)(1) and 100.155(e)(1)--Exemption for Communications 
Placed for a Nominal Fee on Another Person's Website

    In the NPRM, the Commission noted that, consistent with the 
proposed revision to the definition of ``public communication'' to 
encompass communications placed for a fee on another person's website, 
payments for a ``public communication'' on the Internet could also be a 
contribution or expenditure. Therefore, the Commission proposed 
excluding payments for placing communications on another person's 
website from the new exceptions for individual Internet activity, 
unless the communications were placed for a nominal fee, in which case 
they would be excepted from the definitions of contribution and 
expenditure. See NPRM at 16976.
    The Commission has decided to adopt this approach. Accordingly, new 
paragraphs 11 CFR 100.94(e)(1) and 100.155(e)(1) state that the new 
rules exempt nominal payments for a ``public communication,'' as 
defined in 11 CFR 100.26, from the definitions of ``contribution'' and 
``expenditure.'' The Commission notes, however, that a payment for a 
``public communication'' would not necessarily result in a contribution 
or expenditure just because it is not exempted by one of the new 
exceptions; only those payments made for the purpose of influencing a 
Federal election or ``in connection with'' a Federal election would 
result in a contribution or expenditure. See 2 U.S.C. 431(8) and (9), 
441b; 11 CFR 100.52(a), 100.111(a) and 114.2(a).
    The allowance for the payment of a nominal fee in connection with 
uncompensated campaign activity on the Internet is consistent with the 
rules as proposed in the NPRM and the existing volunteer exception that 
allows for payment of a nominal fee in connection with an individual's 
use of real property. See 11 CFR 100.75 (permitting payment of a 
nominal fee for the use of a community room on an individual's 
residential premises). It recognizes, as one commenter noted, that 
``[t]he Internet has effectively put the power of advertising 
communication into the hands of every citizen * * * [a]ds on blogs, for 
example, cost as little as $10 per week, and ads on search engines such 
as Google can cost just 10 cents per click.'' While the commenter's 
remarks describe the low cost of some individual Internet 
advertisements, the Commission notes the aggregate cost of a 
communication, rather than the cost on a per click or per view basis, 
determines whether a fee is nominal. Additionally, the exemption 
recognizes that because many individuals who use the Internet cannot, 
or do not, maintain their own websites, or simply wish to post to a 
blog in a place where it is more likely to be seen by others, an 
exemption for any nominal fee to post on another person's website is 
appropriate. Therefore, individuals or groups of individuals, acting 
independently or as volunteers, who post blogs or other content on host 
sites, would be entitled to the exception just as if the content were 
posted on their own website.

F. 11 CFR 100.94(e)(2) and (3) and 100.155(e)(2) and (3) `` No 
Exemption for Payments for E-mail Lists Made at the Direction of a 
Political Committee or Transferred to a Political Committee

    In the NPRM, the Commission stated that it would continue to view 
the purchase of mailing lists (including e-mail lists) as expenditures 
or contributions when the lists are used to distribute candidate and 
political committee communications for the purpose of influencing 
Federal elections. See NPRM at 16976. Paying for an e-mail list is 
often expensive, whereas distributing the e-mail communications is 
usually free or at negligible cost. The Commission is concerned, 
however, that the new exceptions for individual Internet activities 
might be construed to permit individuals to pay for e-mail lists that 
might then be transferred to, or used by, a political committee without 
any contribution or expenditure resulting. Therefore, new 11 CFR 
100.94(e)(2) and 100.155(e)(2) provide that the exemption for 
individual Internet activities does not apply to any payment for the 
purchase or rental of an e-mail address list when that payment is made 
at the direction of a political committee. Similarly, new 11 CFR 
100.94(e)(3) and 100.155(e)(3) provide that the exemption for 
individual Internet activities does not apply to payments for any e-
mail address list that is subsequently transferred to a political 
committee, whether that transfer is permanent or temporary (i.e., 
sharing the list of e-mail addresses for a one-time use). Under the new 
rule, a contribution or expenditure would not result when an e-mail 
list is purchased by an individual unless either of the conditions in 
paragraphs (e)(2) or (e)(3) of 11 CFR 100.94 and 100.155 are met.

IX. 11 CFR 100.73 and 100.132--Exception for News Story, Commentary, or 
Editorial by the Media

    In the Act, Congress exempted from the definition of 
``expenditure'' costs associated with ``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). This 
exemption, commonly known as the ``media exemption,'' recognizes ``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 media 
exemption is implemented in sections 100.73 and 100.132 of the 
Commission's rules. See 11 CFR 100.73 (media exemption for 
contributions) and 100.132 (media exemption for expenditures).
    In determining whether the media exemption applies, the Commission 
has traditionally applied a two-step analysis. First, the Commission 
asks whether the entity engaging in the activity is a press entity as 
described by the Act and Commission regulations. Second, in determining 
the scope of the exemption, the Commission considers: (1) Whether the 
press entity is owned or controlled by a political party, political 
committee, or candidate; and (2) whether the press entity is acting as 
a press entity in conducting the activity at issue (i.e., whether the 
entity is acting in its ``legitimate press function'').\50\
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    \50\ See Reader's Digest Association v. FEC, 509 F. Supp. 1210, 
1215 (S.D.N.Y. 1981); FEC v. Phillips Publishing, 517 F. Supp. 1308, 
1312-1313 (D.D.C. 1981); Advisory Opinions 2005-16 (Fired Up! LLC), 
2004-07 (MTV, MTV Networks, Viacom, Inc. and Viacom Internation, 
Inc.), 2000-13 (Ampex Corporation and iNEXTV Corporation), 1998-17 
(Daniels Cablevision), 1996-48 (National Cable Satellite 
Corporation), 1996-41 (A.H. Belo Corporation), 1996-16 (Bloomberg, 
L.P.) and 1982-44 (Democratic National Committee and Republic 
National Committee).
---------------------------------------------------------------------------

    In the NPRM, the Commission proposed changing its rules to clarify 
that the protections in the Act for news stories, commentary, and 
editorials appearing in traditional media also apply to news stories, 
commentary, and editorials appearing on the Internet. Specifically, the 
Commission proposed revising 11 CFR 100.73 and 100.132 to indicate that 
news stories, commentaries, and editorials that otherwise would be 
entitled to the media exemption are likewise exempt when they are 
distributed using the Internet.
    The Commission invited comment generally on the proposed changes to 
the media exemption. The Commission also asked a number of specific

[[Page 18608]]

questions, including whether the proposed changes were consistent with 
or required by the Act; what the appropriate breadth of the exemptions 
should be; and whether the exceptions should be limited to entities 
that also have traditional, non-Internet media operations.
    Thirty-seven of the comments filed in response to the NPRM 
addressed the proposed changes to the media exemption. All but one of 
these commenters supported extending the exemption to media activities 
on the Internet,\51\ although they differed with respect to the scope 
of the exemption. Some commenters, for example, suggested that the 
Commission extend the media exemption to any independent entity that 
publishes material, regardless of the medium used, and regardless of 
whether the entity is a member of the traditional media. Others, 
however, opined that not everything disseminated on the Internet 
constitutes media activity within the meaning of the media exemption, 
and urged the Commission to require entities operating on the Internet 
to satisfy the same criteria as entities operating in traditional media 
in order to qualify for the exemption. All of the commenters who 
addressed the question agreed that applying the media exemption to the 
Internet would be consistent with the Act, and none of the commenters 
supported limiting the media exemption to entities that also have 
traditional, non-Internet media operations.
---------------------------------------------------------------------------

    \51\ The lone dissenting commenter supported exempting all 
Internet publications from regulation, but recommended that the 
Commission craft a broad exception independent of the media 
exemption.
---------------------------------------------------------------------------

    The commenters' views on regulating bloggers were more diverse. 
While all commenters who addressed this topic agreed that the media 
exemption should extend to at least some bloggers, the commenters 
differed with respect to whether a blanket exemption should be created 
to cover all bloggers. At one end of the spectrum were those commenters 
who believed that ``all bloggers, whether big, small, incorporated, or 
moonlighting, deserve the media exemption.'' They opined that online 
news provided by blogs is as ``vibrant and vital'' as any offline 
publishing; that blogs satisfy public information needs not met by 
traditional media; that it would be impractical for the Commission to 
``police'' bloggers; and that it would be ``harmful'' for the 
Commission to draw lines between individual bloggers.
    Several commenters explicitly equated bloggers to the proverbial 
speaker on a soapbox in the town square, and argued that any blogger 
who publishes ``campaign-related'' opinions should be shielded from 
regulation under the media exemption. One commenter suggested that the 
Commission exempt all bloggers from financial reporting and 
coordination requirements, while still requiring them to disclose on 
their websites any payments that they receive from candidates or 
political committees for taking a particular position in connection 
with a Federal election.
    Several commenters recommended against exempting bloggers as a 
class from regulation. One commenter observed that ``crucial 
questions'' must be answered before any blogger or online news source 
qualifies for the media exemption, such as whether the entity's 
resources are ``devoted to collecting and disseminating information to 
the public''; whether the entity ``inform[s] and educate[s] the public, 
offer[s] criticism, and provide[s] [a] forum[] for discussion and 
debate''; and whether the entity ``serve[s] as a powerful antidote to 
governmental power abuses and hold[s] officials accountable to the 
people.'' Another commenter urged the Commission to consider a number 
of ``relevant factors'' in determining whether a blogger qualifies for 
the media exemption, such as whether the blogger receives payments from 
a campaign; whether the blogger solicits money for candidates; and 
whether the blogger engages in newsgathering or editorializing.
    The Commission has decided to revise 11 CFR 100.73 and 11 CFR 
100.132 to clarify that the media exemption applies to media entities 
that cover or carry news stories, commentary, and editorials on the 
Internet, just as it applies to media entities that cover or carry news 
stories, commentary, and editorials in traditional media, such as 
printed periodicals or television news programs. The Commission is also 
clarifying that the media exemption protects news stories, 
commentaries, and editorials no matter in what medium they are 
published. Therefore, the Commission has added ``website'' to the list 
of media in the exemption and is also adding ``any Internet or 
electronic publication'' to address publication of news stories, 
commentaries, or editorials in electronic form on the Internet.\52\ In 
so doing, the Commission recognizes that the media exemption is 
available to media entities that cover or carry news stories, 
commentaries, or editorials solely on the Internet, as well as to media 
entities that cover or carry news stories, commentaries, and editorials 
solely in traditional media or in both traditional media and on the 
Internet.
---------------------------------------------------------------------------

    \52\ The terms ``website'' and ``any Internet or elctronic 
publication'' are meant to encompass a wide range of existing and 
developing technology, such as websites, ``podcasts,'' etc. See 
e.g., Testimony of Markos Moulitas Zuniga, Federal Election 
Commission Public Hearing on Internet Communications at 27-28 (June 
28, 2005) (``It is really truly impossible for any one person to 
grasp the scope of Internet communication technologies * * * [O]ff 
the top of my head, I could think of * * * blogging, e-mail, instant 
messaging, message boards, Yahoo groups, Internet Relay Chat, chat 
groups, podcasting, Internet radio, Flash animations, Web video, 
Webcams, peer-to-peer, and social networking software. Then, there 
is Grokster, * * * And the new Apple operating system has these 
little applications called widgets * * * and Microsoft promises to 
do the same. All of these technologies have political applications, 
obviously, yet they are vastly different.'').
---------------------------------------------------------------------------

    The application of the media exemption to Internet communications 
is consistent with past instances in which the Commission has extended 
the media exemption to forms of media that did not exist or were not 
widespread when Congress enacted the exemption in 1974. For example, in 
1996 the Commission changed its rules to make clear that the media 
exemption also applies to news stories, commentary, and editorials 
appearing in cable programming.\53\ The Commission noted that, ``in 
exempting news stories from the definition of `expenditure,' Congress 
intended to assure `the unfettered right of the newspapers, TV networks 
and other media to cover and comment on political campaigns.' '' \54\ 
The Commission found 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.''\55\
---------------------------------------------------------------------------

    \53\ Final Rules on Candidate Debates and News Stories, 61 FR 
18049 (Apr. 24, 1996).
    \54\ Id. at 18050 (quoting H.R. Rep. No. 93-1239, 93rd Cong., 2d 
Sess. at 4 (1974)).
    \55\ Id.
---------------------------------------------------------------------------

    Similarly, although Congress could not have envisioned the Internet 
when it created the media exemption more than thirty years ago, much 
less the revolutionary changes in the area of political communication 
that the Internet has made possible, the Commission finds it reasonable 
to conclude that entities providing news on the Internet are precisely 
the type of ``other media'' appropriately included within the media 
exemption. As the Supreme Court noted, ``It is not the intent of 
Congress in [FECA] * * * to limit or burden in any way the First

[[Page 18609]]

Amendment freedoms of the press and association. Thus, the exclusion 
assures the unfettered right of newspapers, TV networks, and other 
media to cover and comment on political campaigns.'' Massachusetts 
Citizens for Life, 479 U.S. at 250 (citing H.R. Rep. No. 93-129 at p.4 
(1974)).
    The Commission finds as a matter of law that the media exemption 
applies to the same extent to entities with only an online presence as 
to those with an offline component as well. The Washington Post, New 
York Times, CNN and other newspapers and broadcast news sources 
maintain an online presence in addition to their traditional means of 
distribution and dissemination. Salon.com, Slate.com, and 
Drudgereport.com operate exclusively online. The Commission concludes 
that the media exemption applies with full force to all these types of 
entities.
    The Commission has consistently viewed online, Internet-based 
dissemination of news stories, commentaries, and editorials to be 
indistinguishable from offline television and radio broadcasts, 
newspapers, magazines and periodical publications for the purposes of 
applying the media exemption under the Act. For example, in Advisory 
Opinion 2004-07, the Commission determined that the media exemption 
applied to MTV's posting on its website of election-related educational 
materials and the results of a survey of people's preferences for 
President of the United States. As the Commission noted, ``websites are 
a common feature of many media organizations. The Commission considers 
posting news stories, commentaries, and editorials on a press entity's 
website to be within the entity's legitimate press functions.'' 
Advisory Opinion 2004-07 (MTV, MTV Networks, Viacom, Inc. and Viacom 
International, Inc.). The Commission also concluded that the media 
exemption would apply to MTV's contemporaneous announcement and 
publication of survey results to the public via e-mail and text 
messages. Id. See also Advisory Opinion 2003-34 (Viacom, Inc., Showtime 
Networks, Inc., and TMD Productions, Inc.) (promotion by Showtime and 
Viacom on their websites of a television series about a fictional 
presidential election that depicted some real Federal candidates and 
officeholders qualified for the media exemption).
    The Commission has considered whether an Internet video programming 
operator that webcast content was entitled to the media exemption when 
it provided coverage of the Democratic and Republican National 
Conventions over the Internet. In Advisory Opinion 2000-13 (Ampex 
Corporation and iNEXTV Corporation), iNEXTV did not create programming 
under its own name, but rather operated its own network of specialized 
news and information sites that offered direct access to governmental 
and business news events, interviews, and commentary with political 
figures, and a forum where viewers could state their opinions on 
specific issues via computer. The Commission concluded that iNEXTV's 
activities on the Internet were viewable to the general public and were 
akin to a periodical or news program. Therefore, iNEXTV's proposed 
gavel-to-gavel coverage of the Democratic and Republican National 
Conventions fit into the categories of news story and commentary that 
are exempted from the definition of ``contribution'' and 
``expenditure'' under the Act.
    The Commission has also made clear that the press exemption applies 
to a wide variety of online and offline activities. In Advisory Opinion 
2005-16, the Commission determined that the media exemption applied to 
an entity whose Internet sites were publicly available and carried news 
stories, commentaries, and editorials that supported or opposed Federal 
candidates--even where the entity was founded and controlled by a 
former Federal officeholder and a former State party executive 
director. The Commission has specifically determined that the press 
exemption applies regardless of whether the news story, commentary, or 
editorial contains express advocacy. Media entities routinely endorse 
candidates, and the media exemption protects their right to do so. See 
Advisory Opinion 2005-16 (Fired Up! LLC) at 6 (noting that ``an entity 
otherwise eligible for the press exception would not lose its 
eligibility * * * even if the news story, commentary, or editorial 
expressly advocates the election or defeat of a clearly identified 
candidate for Federal office.'').
    The Commission has also concluded that press entities do not 
forfeit the press exemption if they solicit contributions for 
candidates. See Advisory Opinion 1980-109 (James Hansen) (endorsement 
of a Federal candidate and solicitations to the Federal candidate's 
campaign by a publication were covered by the news story exemption); 
Advisory Opinion 1982-44 (Democratic National Committee and Republican 
National Committee) (concluding that solicitations for a national party 
committee on cable programming were protected by the press 
exemption).\56\
---------------------------------------------------------------------------

    \56\ There have been recent instances in which media entities 
have solicited contributions for Federal candidates. See e.g., Kerry 
for Prez: Why Him, Why Now and How to Put Him in the White House, 
Philadelphia Daily News, June 16, 2004 (containing a lead editorial 
that stated ``[Y]ou can learn more about Kerry, make a donation or 
volunteer to help through his web site * * * The commonwealth--
indeed the nation--cannot afford another four years of George 
Bush.''). See also Charles Krauthammer, The Delusional Dean, 
Washington Post, December 5, 2003 at A31 (op-ed by a syndicated 
columnist containing a solicitation for the Republican National 
Committee, including instructions on where readers should send 
contributions).
---------------------------------------------------------------------------

    Moreover, Commissioners have repeatedly concluded that the media 
exemption applies without regard to whether programming is biased or 
balanced. See MUR 3624 (Walter H. Shapiro) (concluding that pro-Bush/
Quayle broadcast by Rush Limbaugh fell within the media exemption even 
though the broadcast was arguably biased); Statement of Reasons by 
Commissioners Wold, McDonald, Mason, Sandstrom, and Thomas in MURs 
4929, 5006, 5090 and 5117 (ABC, CBS, NBC, New York Times, Los Angeles 
Times and Washington Post) (``Unbalanced news reporting and commentary 
are included in the activities protected by the media exemption.''); 
Statement of Reasons by Commissioners Wold and Mason in MUR 4946 (CBS 
News, Fox Network News, CNBC News, MSNBC News, CNN and ABC News) 
(``politically biased reporting and commentary remain within the 
``legitimate press function.'''). See also Statement of Reasons by 
Commissioner Weintraub in MURs 5540, 5545, 5562, and 5570 (CBS, Kerry/
Edwards 2004, Inc. and Sinclair Broadcasting) at 2 (``It is not the 
role of the Federal Election Commission to determine whether a news 
story issued by a press entity is legitimate, responsible, or verified 
* * * Whether particular broadcasts were fair, balanced, or accurate is 
irrelevant given the applicability of the press exemption.'').
    Commissioners have also concluded that the presence or absence of 
alleged coordination between a press entity and a candidate or 
political party is irrelevant to determining whether the Act's press 
exemption applies. See, e.g., Statement of Reasons of Commissioners 
Toner, Mason and Smith in MURs 5540 and 5545 (CBS, Kerry/Edwards 2004) 
(``Allegations of coordination are of no import when applying the press 
exemption. What a press entity says in broadcasts, news stories and 
editorials is absolutely protected under the press exemption, 
regardless of whether any

[[Page 18610]]

activities occurred that might otherwise constitute coordination under 
Commission regulations.''); Statement of Reasons of Commissioner 
Weintraub in MURs 5540, 5545, 5562, and 5570 (CBS, Kerry/Edwards 2004, 
Sinclair Broadcasting) (``I believe it is important to emphasize that 
the press exemption shields press entities from investigations into 
alleged coordination.'')
    More recently, the Commission has determined that the media 
exemption applied to a blogger that covered and carried news stories, 
commentaries, or editorials. In Advisory Opinion 2005-16, the 
Commission analyzed the Internet activity of Fired Up! LLC (``Fired 
Up''), an entity that maintained a network of Internet websites but had 
no offline media presence. The Commission found that a primary function 
of Fired Up's websites was to provide news and information to readers 
through commentary on, quotes from, summaries of, and hyperlinks to 
news articles appearing on other entities' websites and Fired Up's 
original reporting. The Commission viewed the posting of reader 
comments to the website as similar to letters to the editor and noted 
that FiredUp retained editorial control over the content displayed on 
its websites.\57\ The Commission concluded that the activities of Fired 
Up's websites were protected by the media exemption.
---------------------------------------------------------------------------

    \57\ In Advisory Opinion 1982-44 (Democratic National Committee 
and Republican National Committee) the Commission made clear that 
``commentary'' within the meaning of the press exemption is not 
limited to commentaries made by the broadcaster. The Commission 
emphasized that ``commentary'' was intended to allow third persons 
access to the media to discuss issues. The statute and regulations 
do not define the issues permitted to be discussed or the format in 
which they are to be presented under the ``commentary'' exemption.''
---------------------------------------------------------------------------

    The Commission has decided not to change its rules regarding the 
media exemption so as to exempt all blogging activity from the 
definitions of ``contribution'' and ``expenditure.'' The Commission 
believes that such an exemption for one technology-specific category 
would be both too broad and too narrow: it would apply equally to 
blogging activity ``that [is] not involved in the regular business of 
imparting news to the public'' \58\ and communications that are not 
news stories, commentary or editorials within the meaning of the media 
exemption;\59\ at the same time, it would overlook other forms of 
Internet communication, such as publishing websites in other formats or 
``podcasting,'' that are equally deserving of consideration under the 
media exemption.\60\ Moreover, given that methods of communicating over 
the Internet ``are constantly evolving and difficult to categorize 
precisely,'' the wholesale exemption of any particular method of 
Internet communication would be ill advised. Reno, 521 U.S. at 851.
---------------------------------------------------------------------------

    \58\ McConnell, 540 U.S. at 208.
    \59\ See id. (``Section 304(f)(3)(B)(I)'s effect * * * excepts 
news items and commentary only.'').
    \60\ See note 52 clarifying that the terms ``Website'' and ``any 
Internet or electronic publication'' are meant to address a wide 
range of technology that may be used by entities entitled to the 
press exemption.
---------------------------------------------------------------------------

    The Commission concludes that bloggers and others who communicate 
on the Internet are entitled to the press exemption in the same way as 
traditional media entities. This is in keeping with the roles that 
bloggers play in the way that the public receives their news and 
information. Bloggers were issued press credentials for the National 
Nominating Conventions in 2004 \61\ and, more recently, a blogger was 
issued permanent press credentials as a member of the White House press 
corps.\62\ Bloggers who are covering and reporting news stories in the 
same way that traditional media entities have reported on newsworthy 
events are entitled to the same media exemption protection that applies 
to media entities such as CNN, NBC, and other traditional media.\63\
---------------------------------------------------------------------------

    \61\ See http://www.cnn.com/2004/TECH/internet/07/23/conventionbloggers/ (last visited 3/24/06).
    \62\ See http://www.foxnews.com/story/0,2933,149689,00.html 
(last visited 3/24/06).
    \63\ The Commission notes that media entities such as the 
Washington Post, MSNBC, Fox News, and CNN have bloggers reporting 
news and commentary on their Web sites.
---------------------------------------------------------------------------

    The Commission recognizes that the Internet allows for constant, 
up-to-the-minute reporting and coverage. The Commission has concluded 
that online providers of news stories, commentaries and editorials are 
within the press exemption. This conclusion reflects a broad reading of 
``periodical publication.'' In Advisory Opinion 1980-109 (James 
Hansen), the Commission stated that a ``periodical publication'' means 
``a publication in bound pamphlet form appearing at regular intervals 
(usually either weekly, bi-weekly, monthly or quarterly) and containing 
articles of news, information, or entertainment.'' However, with the 
advent of the Internet, frequent updating of the content of a website 
has become commonplace and is not tied to a publishing schedule but to 
the fast pace of breaking news and the availability of information. The 
Commission finds that the term ``periodical'' within the meaning of the 
Act's media exemption ought not be construed rigidly to deny the media 
exemption to entities who update their content on a frequent, but 
perhaps not fixed, schedule. Nor can ``periodical publication'' be 
restricted to works appearing in a bound, pamphlet form. To the extent 
that the conclusions in Advisory Opinion 1980-109 are not applicable to 
online media, that advisory opinion is hereby distinguished. The 
Commission notes that media entities such as WashingtonPost.com and 
Drudgereport.com, as well as many blogs, are updated throughout the day 
and function consistent with a dynamic definition of periodical 
publication.

X. 11 CFR 114.9--Use of Corporate or Labor Organization Facilities

    In the NPRM, the Commission proposed amending its rule regarding 
the provision of corporate or labor organization facilities \64\ in 
connection with a Federal election to clarify that an employee's 
``occasional, isolated, or incidental use'' of computer equipment and 
Internet services for Federal campaign activities would not be an 
expenditure or contribution by the corporation or labor organization. 
Based on the comments received in response to the proposal, the 
Commission is not amending 11 CFR 114.9 precisely as proposed, but 
instead is reaching the same result by adding a new safe harbor 
specifically allowing the use of corporate and labor organization 
facilities for certain individual Internet activity in connection with 
a Federal election.
---------------------------------------------------------------------------

    \64\ The Commission notes that under current 11 CFR 114.9 the 
term ``facilities'' covers a wide variety of office equipment and 
supplies, including, but not limited to, copiers, fax machines, 
telephones, printers, scanners, and meeting and office space.
---------------------------------------------------------------------------

    As noted above, corporations and labor organizations are prohibited 
from making contributions or expenditures, or facilitating the making 
of contributions by certain persons, in connection with a Federal 
election. 2 U.S.C. 441b(a); 11 CFR 114.2(a), (b), and (f). However, 
corporations and labor organizations do not make contributions or 
expenditures, or facilitate the making of a contribution, by permitting 
``occasional, isolated, or incidental use'' of corporate or labor 
organization facilities in connection with a Federal election by 
stockholders and employees of a corporation and officials, members, and 
employees of a labor organization. See 11 CFR 114.2(f)(i) and 11 CFR 
114.9(a) and (b). Under section 114.9, certain classes of individuals 
may use corporate or labor organization facilities for Federal election 
purposes, but must reimburse the corporation or labor organization to 
the extent that, if at all,

[[Page 18611]]

its overhead or operating costs are increased by the individual's 
``occasional, isolated, or incidental use'' of the facilities. See 11 
CFR 114.9(a)(1) and (b)(1). However, if a stockholder or employee of a 
corporation, or an official, member, or employee of a labor 
organization, makes more than ``occasional, isolated, or incidental 
use'' of corporate or labor organization facilities, and does not 
reimburse the corporation or labor organization within a commercially 
reasonable time at the normal and usual rental charge for the 
facilities used (rather than merely for the increase in overhead or 
operating costs), then the corporation or labor organization will have 
made a prohibited contribution or expenditure. See 11 CFR 114.9(a)(3) 
and (b)(3).\65\
---------------------------------------------------------------------------

    \65\ The Commission notes that an individual using corporate or 
labor organization facilities to engage in personal uncompensated 
Internet activities will not make a contribution or expenditure 
because such Internet activities by individuals is exempt under new 
11 CFR 100.94 and 100.155, as discussed above.
---------------------------------------------------------------------------

    Although section 114.9 provides only general guidance for 
determining what constitutes ``occasional, isolated, or incidental 
use,'' see 11 CFR 114.9(a)(1)(i) and (b)(1)(i), the section does 
contain safe harbor provisions. The safe harbors provide that any use 
of corporate or labor organization facilities, regardless of whether it 
occurs during or after working hours, is considered ``occasional, 
isolated, or incidental use'' if the use does not exceed one hour per 
week or four hours per month. See 11 CFR 114.9(a)(2)(ii) and 
(b)(2)(ii).
    In the NPRM, the Commission proposed amending 11 CFR 114.9 to 
clarify that the term ``facilities'' includes computers, software, and 
other Internet equipment and services, but the Commission noted that an 
individual's use of corporate or labor organization computers and 
Internet services for campaign activity over the Internet at home, or 
at locations outside of work, would remain subject to the ``occasional, 
isolated, or incidental use'' restriction.
    Comments on the Commission's proposal to amend 11 CFR 114.9 were 
mixed. Some commenters did not think that the rule needed clarification 
because the language of the current rule is already flexible enough to 
cover corporate and labor organization computers and Internet services 
used for political activity. Others commented that an explicit 
extension of Sec.  114.9 to cover computers and Internet services would 
be ``appropriate'' and ``reasonable.'' A number of commenters argued 
that the safe harbor of one hour a week or four hours a month was not 
adequate for election-related personal Internet activities. As one 
commenter stated, applying the time limitations of the safe harbor 
provision to Internet activities ``is simply not realistic in today's 
political environment.''
    Many commenters argued that in light of the unique nature of 
Internet activities and the portable nature of the computers and other 
facilities needed to conduct these activities, the Commission should 
treat the use of corporate and labor organization facilities for 
Internet activities differently from the use of such facilities for 
other activities. One commenter stated:

[I]t is now common for companies and unions to permit (and at times 
encourage or even require) employees to keep and use company-or 
union-owned laptops during non-working hours. Thus, for many 
employees, a company- or union-owned computer is their primary or 
only home computer, and the employees are permitted to make 
essentially unlimited personal use of those computers--including, 
for those so inclined, for political speech on the Internet.

    In light of these developments, the vast majority of commenters who 
addressed this topic, including commenters from several reform 
organizations, argued that the Commission should abolish any time 
restriction on the use of corporate or labor organization computers and 
other Internet equipment and services.
    The Commission acknowledges that personal use of corporate and 
labor organization laptops, e-mail, Internet service, and other similar 
facilities is often permitted, and the Commission agrees with these 
commenters that it would serve little purpose for Commission 
regulations to prohibit or overly restrict such common uses of 
facilities. The Commission agrees with a commenter who said 
``[c]orporate or labor organization provision of a computer and 
Internet access is not analogous to the use of a building or facility, 
either in financial or practical terms. What would be comparable is 
providing a pen and paper.''
    Accordingly, the Commission is amending 11 CFR 114.9 to add new 
safe harbors specifically addressing the provision of corporate or 
labor organization facilities for Internet activities. See 11 CFR 
114.9(a)(2)(ii) and (b)(2)(ii). The new safe harbors provide that a 
corporation or labor organization may permit its employees, 
shareholders, officials, and members to use its computer and Internet 
facilities for volunteer individual Internet activity, as defined in 11 
CFR 100.94, without a contribution resulting, provided that the 
activity does not prevent an employee from completing the normal amount 
of work for which the employee is paid or is expected to perform, as 
specified in 11 CFR 100.54, does not increase the overhead or operating 
costs of the corporation or labor organization, and the activity is in 
no way coerced.
    Thus, the new provisions of 11 CFR 114.9 complement the provisions 
of 11 CFR 100.94 and 100.155. Under 11 CFR 100.94 and 100.155, 
individuals are free to use whatever computer and Internet facilities 
that are otherwise available to them to engage in uncompensated 
Internet political activities. Under 11 CFR 114.9, corporations and 
labor organizations may permit access to their computers and Internet 
facilities so that stockholders, employees, members, and officials may 
conduct these activities. The final rules make clear that corporations 
and labor organizations may not condition the availability of their 
facilities on their being used for political activity or on support for 
or opposition to any particular candidate or political party. See 11 
CFR 114.9(a)(1) and 114.9(b)(1). Rather, corporations and labor 
organizations may permit use of their facilities for political 
activities to the extent these facilities are available for other non-
work-related purposes.
    In the new safe harbors, the Commission is not quantifying a 
permissible level of use of corporate and labor organization facilities 
for Internet activities. As one commenter explained, ``any 
organization, union or corporation, is going to have policies that 
control [the ability of employees or staff to use corporate facilities 
and union facilities], that restrict [such use] in order for it to do 
its ordinary business. And [] you can leave it to these organizations 
acting sensibly that they are not going to have a workplace where 
anyone can, to an unlimited amount, [at least] on the job, use their 
facilities for private pursuits, political pursuits, anything unrelated 
to the organization's mission.'' Additionally, because 11 CFR 100.54 
applies to the safe harbors at 11 CFR 114.9(a)(2) and 114.9(b)(2), 
employees must complete their normal work in order to avail themselves 
of these safe harbors. Thus, individual Internet activities must be 
undertaken on the individual's own time.
    One witness testified that ``a lot of us work at all hours of the 
day, and it's very useful to be able to use the computer at the office 
for some of our personal work as well, whatever that may be * * * [to 
be limited to 1 hour per week and 4 hours per month is] basically just 
forcing people to kind of live an abnormal life.'' The reference to 11 
CFR 100.54 is meant to address this type of situation and confirm that 
so

[[Page 18612]]

long as the campaign activity does not, as one witness stated, 
``interfere with their normal work,'' i.e. the normal amount of work 
that the employee usually performs, no contribution will result.
    The reference to 11 CFR 100.54 applies to the safe harbors at 11 
CFR 114.9(a)(2) and (b)(2). Thus, while there is no specific time limit 
on Internet activities, employees must complete their normal work in 
order to avail themselves of these safe harbors. A corporation or labor 
organization may not subsidize the activity by, for example, reducing 
an employee's workload to provide extra time for campaign activities at 
corporate or labor organization expense. Subject to those conditions, 
there is no ceiling on the amount of time that an employee may spend in 
a given day or week engaging in online political activities.
    In addition to the safe harbors for the use of corporate or labor 
organization facilities to engage in Internet activities, the 
Commission is also preserving the one hour per week/four hours per 
month safe harbors, which will continue to apply across-the-board to 
usage of all types of corporate and labor organization facilities. See 
11 CFR 114.9(a)(2)(i) and 114.9(b)(2)(i).
    In the NPRM, the Commission sought comment on whether additional 
rules would be necessary to ensure that corporations and labor 
organizations did not ``coerce'' their employees or others into 
engaging in campaign activities over the Internet. The Commission 
received unanimous agreement from commenters addressing this issue that 
the current rules prohibiting corporate and labor organization coercion 
for contributions or fundraising activities are sufficient to prevent 
such behavior regarding Internet activities. Since the new safeguards 
for individual Internet activity encompass more than fundraising 
activities, however, the Commission is adding new provisions at 11 CFR 
114.9(a)(2)(ii)(C) and (b)(2)(ii)(C) to ensure that every individual is 
free to express his or her own views, without fear of reprisal. The 
Commission notes that corporations and labor organizations providing 
their facilities to their employees, stockholders, officials, or 
members remain subject to the prohibitions contained in 11 CFR 114.2, 
which includes a prohibition on the use of coercion, including threat 
of detrimental job action, any other financial reprisal, or force, to 
urge any individual to make a contribution or engage in fundraising 
activities on behalf of a candidate or political committee. See 11 CFR 
114.2(f)(2)(iv); see also 2 U.S.C. 441b(b)(3). The Commission is also 
adding new paragraph (e) to Sec.  114.9 to indicate that this section 
does not alter other provisions of 11 CFR part 114 regarding 
communications to and beyond a corporation's or labor organization's 
restricted class.
    The Commission is also making technical amendments to 11 CFR 114.9 
to restructure the format of the existing safe harbor. This change does 
not alter the substance of the rule or the existing safe harbor, but 
merely provides a clearer rule structure to accommodate the new safe 
harbor provision.

Certification of No Effect Pursuant to 5 U.S.C. 605(b)

Regulatory Flexibility Act

    The Commission certifies that the attached final rules will 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 activities.
    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, the proposed rule preserves the 
Commission's general exclusion of Internet communications from the 
scope of regulation, and only State, district, and local political 
parties and candidates could be subject to different funding 
requirements for certain communications. 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.

0
For the reasons set out in the preamble, the Federal Election 
Commission amends 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)

0
1. The authority citation for part 100 continues to read as follows:

    Authority: 2 U.S.C. 431, 434, and 438(a)(8).


0
2. Section 100.25 is 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.

0
3. Section 100.26 is revised to read as follows:

[[Page 18613]]

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 communications 
placed for a fee on another person's Web site.

0
4. The introductory text of Sec.  100.73 is 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), Web site, newspaper, magazine, or 
other periodical publication, including any Internet or electronic 
publication, 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:
* * * * *

0
5. Section 100.94 is added to subpart C to read as follows:


Sec.  100.94  Uncompensated Internet activity by individuals that is 
not a contribution.

    (a) When an individual or a group of individuals, acting 
independently or in coordination with any candidate, authorized 
committee, or political party committee, engages in Internet activities 
for the purpose of influencing a Federal election, neither of the 
following is a contribution by that individual or group of individuals:
    (1) The individual's uncompensated personal services related to 
such Internet activities;
    (2) The individual's use of equipment or services for uncompensated 
Internet activities, regardless of who owns the equipment and services.
    (b) Internet activities. For the purposes of this section, the term 
``Internet activities'' includes, but is not limited to: Sending or 
forwarding electronic messages; providing a hyperlink or other direct 
access to another person's Web site; blogging; creating, maintaining or 
hosting a Web site; paying a nominal fee for the use of another 
person's Web site; and any other form of communication distributed over 
the Internet.
    (c) Equipment and services. For the purposes of this section, the 
term ``equipment and services'' includes, but is not limited to: 
Computers, software, Internet domain names, Internet Service Providers 
(ISP), and any other technology that is used to provide access to or 
use of the Internet.
    (d) Paragraph (a) of this section also applies to any corporation 
that is wholly owned by one or more individuals, that engages primarily 
in Internet activities, and that does not derive a substantial portion 
of its revenues from sources other than income from its Internet 
activities.
    (e) This section does not exempt from the definition of 
contribution:
    (1) Any payment for a public communication (as defined in 11 CFR 
100.26) other than a nominal fee;
    (2) Any payment for the purchase or rental of an e-mail address 
list made at the direction of a political committee; or
    (3) Any payment for an e-mail address list that is transferred to a 
political committee.

0
6. The introductory text of Sec.  100.132 is 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), Web site, newspaper, magazine, or 
other periodical publication, including any Internet or electronic 
publication, 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:
* * * * *

0
7. Section 100.155 is added to read as follows:


Sec.  100.155  Uncompensated Internet activity by individuals that is 
not an expenditure.

    (a) When an individual or a group of individuals, acting 
independently or in coordination with any candidate, authorized 
committee, or political party committee, engages in Internet activities 
for the purpose of influencing a Federal election, neither of the 
following is an expenditure by that individual or group of individuals:
    (1) The individual's uncompensated personal services related to 
such Internet activities;
    (2) The individual's use of equipment or services for uncompensated 
Internet activities, regardless of who owns the equipment and services.
    (b) Internet activities. For the purposes of this section, the term 
``Internet activities'' includes, but is not limited to: Sending or 
forwarding electronic messages; providing a hyperlink or other direct 
access to another person's website; blogging; creating maintaining or 
hosting a website; paying a nominal fee for the use of another person's 
website; and any other form of communication distributed over the 
Internet.
    (c) Equipment and services. For the purposes of this section, the 
term ``equipment and services'' includes, but is not limited to: 
Computers, software, Internet domain names, Internet Service Providers 
(ISP), and any other technology that is used to provide access to or 
use of the Internet.
    (d) Paragraph (a) of this section also applies to any corporation 
that is wholly owned by one or more individuals, that engages primarily 
in Internet activities, and that does not derive a substantial portion 
of its revenues from sources other than income from its Internet 
activities.
    (e) This section does not exempt from the definition of 
expenditure:
    (1) Any payment for a public communication (as defined in 11 CFR 
100.26) other than a nominal fee;
    (2) Any payment for the purchase or rental of an e-mail address 
list made at the direction of a political committee; or
    (3) Any payment for an e-mail address list that is transferred to a 
political committee.

PART 110--CONTRIBUTION AND EXPENDITURE LIMITATIONS AND PROHIBITIONS

0
8. The authority citation for part 110 continues 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.


0
9. Paragraph (a) of Sec.  110.11 is revised to read as follows:


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

    (a) Scope. The following communications must include disclaimers, 
as specified in this section:
    (1) All public communications, as defined in 11 CFR 100.26, made by 
a political committee; electronic mail of more than 500 substantially 
similar communications when sent by a political committee; and all 
Internet websites of political committees available to the general 
public.
    (2) All public communications, as defined in 11 CFR 100.26, by any 
person that expressly advocate the election or defeat of a clearly 
identified candidate.
    (3) All public communications, as defined in 11 CFR 100.26, by any 
person that solicit any contribution.
    (4) All electioneering communcations by any person.
* * * * *

[[Page 18614]]

PART 114--CORPORATE AND LABOR ORGANIZATION ACTIVITY

0
10. The authority citation for part 114 is revised to read as follows:


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


0
11. In Sec.  114.9, paragraphs (a) and (b) are revised and new 
paragraph (e) is added to read as follows:


Sec.  114.9  Use of corporate or labor organization facilities.

    (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 and 11 CFR 100.54, make 
occasional, isolated, or incidental use of the facilities of a 
corporation for individual volunteer activity 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. A corporation may not condition the availability of its 
facilities on their being used for political activity, or on support 
for or opposition to any particular candidate or political party. As 
used in this paragraph, occasional, isolated, or incidental use 
generally means--
    (i) When used by employees during working hours, an amount of 
activity which does not prevent the employee from completing the normal 
amount of work which that employee usually carries out during such work 
period; or
    (ii) When used by stockholders other than employees during the 
working period, such use does not interfere with the corporation in 
carrying out its normal activities.
    (2) Safe harbor. For the purposes of paragraph (a)(1) of this 
section, the following shall be considered occasional, isolated, or 
incidental use of corporate facilities:
    (i) Any individual volunteer activity that does not exceed one hour 
per week or four hours per month, regardless of whether the activity is 
undertaken during or after normal working hours; or
    (ii) Any such activity that constitutes voluntary individual 
Internet activities (as defined in 11 CFR 100.94), in excess of one 
hour per week or four hours per month, regardless of whether the 
activity is undertaken during or after normal working hours, provided 
that:
    (A) As specified in 11 CFR 100.54, the activity does not prevent 
the employee from completing the normal amount of work for which the 
employee is paid or is expected to perform;
    (B) The activity does not increase the overhead or operating costs 
of the corporation; and
    (C) The activity is not performed under coercion.
    (3) A stockholder or employee who makes more than occasional, 
isolated, or incidental use of a corporation's facilities for 
individual volunteer activities in connection with a Federal election 
is required to reimburse the corporation within a commercially 
reasonable time for the normal and usual rental charge, as defined in 
11 CFR 100.52(d)(2), for the use of such facilities.
    (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 and 
11 CFR 100.54, make occasional, isolated, or incidental use of the 
facilities of a labor organization for individual volunteer activity 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 labor organization are increased. A labor 
organization may not condition the availability of its facilities on 
their being used for political activity, or on support for or 
opposition to any particular candidate or political party. As used in 
this paragraph, occasional, isolated, or incidental use generally 
means--
    (i) When used by employees during working hours, an amount of 
activity during any particular work period which does not prevent the 
employee from completing the normal amount of work which that employee 
usually carries out during such work period; or
    (ii) When used by members other than employees during the working 
period, such use does not interfere with the labor organization in 
carrying out its normal activities.
    (2) Safe harbor. For the purposes of paragraph (b)(1) of this 
section, the following shall be considered occasional, isolated, or 
incidental use of labor organization facilities:
    (i) Any individual volunteer activity that does not exceed one hour 
per week or four hours per month, regardless of whether the activity is 
undertaken during or after normal working hours; or
    (ii) Any such activity that constitutes voluntary individual 
Internet activities (as defined in 11 CFR 100.94), in excess of one 
hour per week or four hours per month, regardless of whether the 
activity is undertaken during or after normal working hours, provided 
that:
    (A) As specified in 11 CFR 100.54, the activity does not prevent 
the employee from completing the normal amount of work for which the 
employee is paid or is expected to perform;
    (B) The activity does not increase the overhead or operating costs 
of the labor organization; and
    (C) The activity is not performed under coercion.
    (3) The officials, members, and employees who make more than 
occasional, isolated, or incidental use of a labor organization's 
facilities for individual volunteer activities in connection with a 
Federal election are required to reimburse the labor organization 
within a commercially reasonable time for the normal and usual rental 
charge, as defined in 11 CFR 100.52(d)(2), for the use of such 
facilities.
* * * * *
    (e) Nothing in this section shall be construed to alter the 
provisions in 11 CFR Part 114 regarding communications to and beyond a 
restricted class.

    Dated: March 27, 2006.
Michael E. Toner,
Chairman, Federal Election Commission.
[FR Doc. 06-3190 Filed 4-11-06; 8:45 am]
BILLING CODE 6715-01-P