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COPYRIGHT 2006 Stanford Law School
INTRODUCTION
I. A BRIEF HISTORY AND OVERVIEW OF FECA A. Regulatory History 1. Federal elections 2. The Internet B. An Overview of FECA 1. FECA 's framework 2. Activities exempted from regulation II. APPLYING FECA TO ONLINE ACTIVITIES A. The Question of Costs B. Paid Online Advertisements as Coordinated Communications C. The Individual Volunteer and Media Exemptions 1. The individual volunteer activity exemption 2. The media exemption III. A DISCLAIMER REQUIREMENT FOR PAID ONLINE SPEECH A. Bloggers on Payrolls 1. The Thune bloggers: How paid speech undermines FECA 2. Dean and DailyKos.com." "Technical consulting" and voluntary disclosure B. The Constitutionality of Compelled Disclosure: Buckley and McIntyre C. The Proposed Requirement 1. Compelling government interests 2. Narrow tailoring D. Practical Implications: The Requirement's Effect on Online Speech CONCLUSION
INTRODUCTION
During the 2004 election cycle, Americans went online in unprecedented numbers to obtain and exchange information about candidates and campaign issues. (1) In addition to facilitating political debate, this explosion of online political activity has galvanized substantial expenditures of money--over $27 million was spent on online advertisements, e-mail list services, and other Internet activities during the 2004 elections alone. (2) Because the pervasiveness of online campaign activity and related expenditures is only expected to increase in the coming years, (3) the question of how campaign finance law should regard such activity is of both immediate and increasing importance.
The Internet is distinct from other media in that the low cost of entry and continued use makes speech possible for a broad cross-section of the general public. (4) The medium's low-cost character is central to the campaign finance question insofar as it permits a broader pool of participants. Whereas the opportunity to be heard in television, radio, or print news must generally be purchased at substantial cost, anyone with access to a computer and a phone line can express her views online. (5) "Marginalized voices [and] dissenting viewpoints ... flourish in the weblog universe" and can have a meaningful presence in that forum without expending substantial funds. (6) The sheer volume of online political actors makes it less likely that monied parties will be able to dominate political debate on the Internet, as they can in other media.
Despite its distinctive ability to facilitate public participation in the political process, the Internet may also present new opportunities for circumventing the Federal Election Campaign Act (FECA or the Act) and its regulations. At the very least, it may provide little-explored avenues for undermining media accountability and thwarting FECA's goal of promoting transparency in federal elections. "Like all media, blogs hold the potential for abuse." (7) But far less is known about that potential in the case of blogs than is with regard to more traditional media. Moreover, the Internet lacks many of the mechanisms that promote accountability in the institutional media: "Where journalists' careers may be broken on ethics violations, bloggers are writing in the Wild West of cyberspace. There remains no code of ethics, or even an employer, to enforce any standard." (8) It was with this lack of institutional safeguards in mind that the D.C. District Court cautioned that a broad, per se exclusion of the Internet from FECA's regulations would "permit rampant circumvention of the campaign finance laws and foster corruption or the appearance of corruption" in federal elections. (9) Consistency with FECA's goals therefore requires some degree of regulation of Internet activities. The question is, which online activities should be regulated, and to what extent?
The Internet's low-cost character is also relevant to the campaign finance debate because FECA is "predicated on an 'expenditure' or 'disbursement' being made," (10) and the range of Internet activities that might be deemed to fall within the reach of the current law may therefore be limited according to how costs are assigned. However, given the new and growing importance of online political activities to federal campaigns, any system of cost assignment that ignores the value of those activities is difficult to defend. There appear to be two approaches to cost assignment that the Federal Election Commission (FEC) might reasonably take that would place Internet activities within FECA's ambit. One option is to calculate the cost of an activity's inputs--i.e., the share of hardware and software expenses, bandwidth charges, domain name fees, and other equipment costs attributable to a given activity. Although such costs will in most cases be nominal, they could still reasonably serve as the basis for determining the value of a given contribution or expenditure. A second option is to assign cost on the basis of the activity's value to a candidate--i.e., what the candidate would have been willing to pay for comparable coverage in that market. Under either method of assignment, a large volume of online activities could be seen to involve some kind of "expenditure or disbursement being made." Such activities could therefore reasonably be seen to fall within FECA's ambit. (11)
This Note discusses how FECA should apply to online political activities. Part I briefly describes how the federal government has historically regulated both federal elections and the Internet. This Part also provides an overview of FECA's regulatory framework and examines the rationales for regulating some activities while exempting others. Part II suggests that certain FECA regulations and exemptions ought to apply equally to online activities as to those conducted in more traditional media. Part III then proposes a disclaimer provision to prevent the exemptions from becoming the latest means for circumventing FECA. The provision would require online media actors who receive funding from candidates, (12) political parties, or political committees (13) to provide notice to the FEC. Although compelled speech requirements can be constitutionally questionable, (14) the importance of the informational and anticircumvention interests furthered by the proposed requirement justify the minimal restrictions that it would impose.
I. A BRIEF HISTORY AND OVERVIEW OF FECA
A. Regulatory History
Although campaign finance reform was originally intended to prevent financial quid pro quos between politicians and monied parties, (15) the Supreme Court has since recognized the government's interest in deterring corruption more broadly and has upheld regulation to that end. (16) FECA is now understood to be a means both for combating "the corrosive and distorting effects of immense aggregations of wealth" (17) on the political process and for protecting the public's right to participate meaningfully in that process. (18) Accordingly, to the extent that aggregated capital continues unduly to influence the public discourse about candidates and election issues, FECA's goal is undermined.
The scope of FECA has been the subject of continuing controversy. On the one hand, Congress has sought to implement a solution broad enough that it cannot easily be circumvented, and, on the other, the courts have invalidated overbroad provisions that unduly infringe upon individuals' constitutional rights. Various provisions of FECA and its implementing regulations have been challenged in the courts alternatively for being too restrictive, as in Buckley (19) and McConnell, (20) and for not being restrictive enough, as in Shays. (21) To determine the appropriateness of a provision's breadth, courts have weighed the provision's ability to protect open debate and promote elections free from corruption against the extent to which it interferes with individuals' First Amendment right to unfettered political speech. (22) The path of campaign finance reform has been directed from its inception by these competing interests, (23) and that long history of circumvention and reform should inform the current debate over regulation of online political activity by bringing into specific relief the competing interests at stake.
1. Federal elections
The concentration of wealth precipitated by the industrial expansion of the late nineteenth century "had profound implications for American life." (24) Among them was a growing concern that "aggregated capital unduly influenced politics," to the point of corruption. (25) Nineteenth-century industrial giants "controlled newspapers and magazines; subsidized candidates; bought legislation and even judicial decisions." (26) In response to that consolidation of wealth and power, many states, toward the end of the nineteenth century, initiated campaign finance reform and began requiring candidates to disclose the sources and amounts of campaign contributions and expenditures. (27) The 1904 presidential election brought the question of campaign finance into the national spotlight, and in 1907 Congress passed the Tillman Act, (28) which prohibited corporations from contributing to campaigns for federal office. (29) That Act was "the first concrete manifestation of a continuing congressional concern for elections free from the power of money," and "[i]ts underlying philosophy was to sustain the active, alert responsibility of the individual citizen in a democracy for the wise conduct of government." (30)
Since then, federal election law has been punctuated by amendments intended to close emerging loopholes and by judicial responses to those amendments (31)--a cycle that even the passage of FECA in 1971 did little to interrupt. (32) The Bipartisan Campaign Reform Act of 2002 (BCRA) (33) marks Congress's most recent attempt to reduce actors' "infinite ability to eviscerate[] statutory limitations on contributions and expenditures." (34) Specifically, BCRA was intended to close emerging soft-money loopholes that had become a popular method to avoid FECA's contribution limits and reporting requirements. (35) And that Act is only the most recent legislative step in what promises to be a perpetually evolving process. As the Court itself professed: "We are under no illusion that BCRA will be the last congressional statement on the matter. Money, like water, will always find an outlet." (36)
This cycle of circumvention and amendment is largely a product of the difficulty inherent in Congress's task of formulating legislation comprehensive enough to eliminate the major avenues of circumvention without unconstitutionally impinging on rights granted by the First Amendment. Although the Court has been more deferential to Congress's action in the field of campaign finance reform in some periods than in others, (37) the struggle to find a satisfactory middle ground between easily circumvented and unconstitutionally overbroad legislation has permeated the law's history. The incessant development of new means of circumvention only serves to further complicate that already difficult endeavor.
2. The Internet
Unlike federal elections, which have been heavily regulated for over a century, the Internet has only been in general public use for a decade, and Congress has thus far been somewhat reluctant to regulate it. In its early confrontations with the issue, Congress has articulated a hands-off policy toward regulating online activities. The Telecommunications Act of 1996, for instance, made it "the policy of the United States to promote the continued development of the Internet ... [and] to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation." (38)
Despite Congress's reluctance, the FEC has contemplated for more than six years that FECA might govern political activities conducted on the Internet. As early as 1999, the Commission considered whether a hands-off approach to Internet regulation might not be appropriate and opened for comment the question of FECA's applicability to campaign activity conducted through that medium. (39) But the Commission never issued a rule to resolve the questions it raised, (40) and it has instead been determining FECA's applicability to the Internet primarily through Advisory Opinions, on a case-by-case basis. (41)
BCRA did little to answer the question of how online political activity should be regulated. If anything, its failure to address the question directly further clouded those already muddy waters. Although certain provisions of BCRA refer to the Internet, (42) the statute does not expand any of FECA's definitions of regulated activity to explicitly include online activities, leaving FECA's applicability to such activities open to interpretation. In promulgating regulations, the FEC took BCRA's silence to evince congressional intent to exempt all online activities from FECA's reach. (43) The D.C. District Court rejected that interpretation, (44) and on April 4, 2005, the FEC issued a Notice of Proposed Rulemaking (NPRM), raising a number of questions as to how FECA should apply to activity conducted on the Internet. (45)
B. An Overview of FECA
1. FECA's framework
FECA employs two predominant tools to regulate the flow of money in federal elections: limitations on the dollar amount of different actors' political contributions, and requirements that actors making expenditures to influence the outcome of a federal campaign disclose to the FEC and/or the public the fact and nature of their expenditures. Although both tools are generally used to further the same goals--namely, to prevent corruption, further public participation in the political process, and prevent circumvention of FECA's other provisions--each imposes different burdens in achieving them. Whereas disclosure requirements are "the least restrictive means of curbing the evils of campaign ignorance and corruption," (46) limits on dollar amounts of contributions are among the most restrictive. The relative burden imposed by each tool is critical to the analysis as to when the use of either (or both) is appropriate, because in order to be constitutional, a regulation must be sufficiently broad to further a compelling governmental interest and yet sufficiently narrow to "satisfy the exacting scrutiny applicable to limitations on core First Amendment rights of political expression." (47)
Very generally, FECA applies the limitations tool to disbursements qualifying as "contributions" (48) and the disclosure requirement to disbursements qualifying as "expenditures." (49) A contribution is anything of value conferred to a candidate, political party, or political committee, (50) with certain exceptions. (51) An expenditure, on the other hand, is anything of value conferred to a third party for the purpose of influencing a federal election, (52) again exempting certain activities. (53) Because expenditures very often take the form of candidate advertisements or other public communications, they are regarded as more substantial speech activities than are contributions, (54) and are accordingly regulated by means of the less restrictive tool. (55) When such expenditures are made in concert with, at the behest of, or otherwise in cooperation with a candidate or political party, however, they are termed "coordinated expenditures" and are counted as contributions. (56) Although such disbursements are superficially expenditures, the fact of coordination justifies the more restrictive limitations rule, as it is necessary to "prevent attempts to circumvent the Act through prearranged or coordinated expenditures amounting to disguised contributions." (57) The approach also illustrates FECA's generally function-driven approach to regulation. Because FECA employs these different means, with their substantially different burdens, to regulate contributions and expenditures, the characterization of a given disbursement is usually determinative of the disburser's obligations under the Act. (58)
2. Activities exempted from regulation
Just as FECA regulates as contributions any activities that could otherwise lead to corruption or circumvention of the Act, so too it tends to exempt from regulation activities that present little risk of corruption or circumvention. To determine whether regulation of a given activity is appropriate, Congress (often followed by the courts) balances the magnitude of those risks (and the government's interests in preventing them) against the extent to which regulation would infringe on individual rights. For instance, in Buckley v. Valeo, (59) the Court found that the statute limiting independent expenditures by individuals was unconstitutional because the weight of the government interest (in preventing circumvention of contribution limits) that it furthered, discounted by the likelihood that the provision would fail to achieve that goal, was less substantial than the First Amendment rights on which the regulation would infringe. (60) That analysis provides the central justification for both the individual volunteer and media exemptions, as each is concerned with core First Amendment activity that presents relatively little risk of corruption or circumvention.
a. The individual volunteer activity exemption
Under the individual volunteer activity exemption, FECA exempts from its definition of contribution "the value of services provided without compensation by any individual who volunteers on behalf of a candidate or political committee," (61) as well as the nominal cost of real or personal property used to carry out such activities. (62) Such services are exempted regardless of whether the volunteer is acting in coordination with a candidate. (63)
Exempting volunteer activities is appropriate because the First Amendment interests at stake are substantial and because such activities, as defined by FECA, provide little risk of corruption or circumvention. The necessarily low-cost nature of volunteer activity leaves little opportunity for actors to use it as a subterfuge to circumvent the Act's limits and reporting requirements. Additionally, the statute precludes individuals from couching contributions as volunteer activities by making nonexempt all in-kind contributions. (64)
Public policy considerations and the purpose of the statute also counsel in favor of the exemption. It is both in the public interest and consistent with the spirit of FECA to facilitate (or at the very least avoid discouraging) direct individual engagement in the political process through means other than making disbursements.
b. The media exemption
FECA exempts from its definition of expenditure the costs incurred in conducting "media activities." (65) The exemption is intended to "assure the unfettered right of the newspapers, television networks, and other media to cover and comment on political campaigns," (66) and it is consistent with the long-standing national policy that "debate on public issues should be uninhibited, robust, and wide-open." (67) A free press is also thought to give rise to "more fully and completely inform[ed] ... voters." (68) Although media activities, due to their commercial nature, present greater opportunities for circumvention and corruption than do volunteer activities, those risks are effectively cabined through the exemption's narrow tailoring and are accordingly outweighed by the substantial First Amendment interests that the exemption protects.
As in the case of individual volunteer activities, the First Amendment is highly protective of media activity. Regulation of media activity would interfere with the "right of the newspapers, television networks, and other media to cover and comment...
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