No Consensus on Limiting Individual Exemption’s Impact in FEC Hearing

At least one commissioner said he doesn’t accept as the final word a U.S. Dist. Court, D.C. ruling that the FEC improperly excluded the Internet from regulation (WID Sept 21/04 p1). Vice Chmn. Michael Toner noted the Commission is challenging the Shays v. FEC plaintiffs’ legal standing in U.S. Appeals Court, D.C.; if upheld, it would apply only in Washington, D.C. He cited comments filed with the FEC by Sens. Kerry (D-Mass.) and Edwards (D-N.C.) that “Congress did not intend to create new barriers to Internet use” by passing the Bipartisan Campaign Reform Act (BCRA). Senate Minority Leader Reid (Nev.) also has offered legislation excluding the Internet from the law’s scope. That bill already has passed the House Administration Committee, Toner said. Comr. Bradley Smith, a vocal critic of the proposed rules who announced his resignation 2 weeks ago (WID June 16 p1), followed Toner’s remarks: “My statement is what he said.”

“Imposing a regime that requires that the question [of legality] even has to be asked” will stifle grassroots online activism, Kerry for President counsel Marc Elias said. Center for Responsive Politics Exec. Dir. Lawrence Noble emphasized that low-level campaign volunteers always engage in borderline activities -- putting up yard signs, campaigning door to door -- without worrying about the law, and the FEC proposal wouldn’t suddenly chill those activities. RedState.org blogger Michael Krempasky strongly disagreed, saying the proposal’s allowed online activities are so vague “the only possible way to evaluate [someone’s activity] is after the fact,” in a formal investigation.

Markos Moulitsas, founder of DailyKos.com, played down his heavy-hitter status in the blogosphere, calling himself “just a guy with a blog.” But Moulitsas’ huge influence among liberal activists -- and known coordination with Democratic politicians -- was cited by commissioners as evidence of likely results from a broad relaxation of FEC rules online. Comr. Ellen Weintraub asked Moulitsas if he accepts compensation other than ads. He noted he was paid to create online message boards for the Dean campaign, but neither Dean nor he controlled their content. Moulitsas also admitted blogging for Dean’s candidacy while consulting for him, raising a few commissioners’ eyebrows. Blogging has been his primary profession for less than 2 years, and none of his consulting has affected site content, Moulitsas said. In answer to other questions, he said he would spend roughly $150,000 on the site this year, had one paid employee and he pulls content posted by others. He added that accepting payment to post content from a candidate would be improper.

Just because relatively little was spent online in the 2004 campaign doesn’t mean the amount won’t balloon, said Carol Darr, Institute for Politics, Democracy & the Internet (IPDI) dir. Soft money was missing from the 1976 election, which directly followed the Federal Election Campaign Act (FECA) that created the category, but the 1980 campaign featured millions in soft money, she said: “That little tiny loophole over 20 years” has led to billions in soft money spending. But Blogging of the President (www.BOPnews.com) co-creator Matt Stoller said he wasn’t surprised “moneyed interests” didn’t do much online in 2004. The most popular websites, such as JibJab.com, spread through word of mouth, not advertising. Companies are more likely to be influenced by consumer behavior online than the reverse, Stoller said.

A hypothetical group of 3 college students drew much disagreement over how to classify their political activities. If they collectively spent $1,100 on Internet communications, they could face legal trouble for not registering as a committee, Center for Democracy & Technology (CDT) counsel John Morris said. Their getting hauled into an FEC inquiry would chill other students’ speech, he added. Noble said it would be fine if those students pooled their own money to buy an ad in a paper, but not if one student collected $25,000 from others to buy an ad. Smith disputed the difference between the 2 scenarios; Noble said the latter is about a committee controlling money.

Disputes arose over which exemption would protect individual speech online without nullifying campaign finance law across the board, even among witnesses otherwise in agreement. Extending the media exemption would create an “absolutely unavoidable consequence": An influx of “big money” as corporations, unions and billionaires like George Soros join the fray, Darr said. “Every loophole that can be exploited will be exploited… all the campaign laws crumble” if the media exemption is expanded, she added. Noble said a person’s or group’s legal status often can be decided via simple questions, starting with any money they spent and whether they qualify as volunteers. The statutory definition of “media” itself precedes FECA and BCRA: “I just don’t think you can make everybody the ‘press’,” Noble said.

Online activists quickly shot back. “What would you do if this were a small newspaper that started in an election?” Krempasky said. Regardless of its partisanship, it would have the media exemption. Without that, opposing online activists “are going to file complaints against each other up the wazoo.” Moulitsas noted he had to incorporate to defend himself from threatened lawsuits, and said discussions about excluding “corporations” or “groups” from categorical protection make him nervous. He cited political activists that have fallen under the media exemption, such as Democratic consultants and former CNN Crossfire hosts Paul Begala and James Carville.

Asked by Toner if he would be comfortable with a total exemption for individual online speech, Noble said yes. Noble also said his thinking has “evolved” on individuals using work-owned computers for political activities. He would support unlimited use of work computers for political activities as long as their use doesn’t impede normal business functions and employees direct their own online activities. Simon said the same. Smith wasn’t impressed with campaign finance reformers’ suggestions for protecting individual speech, which “seem to be made out of whole cloth,” lacking any statutory authority. He also was skeptical of how the FEC would institute a monetary threshold for exemption; Simon said they can regulate temporarily while Congress considers a figure. FEC Chmn. Scott Thomas said the Commission has asked Congress for a higher amount.

The harm from corporations and unions spending vast amounts online is vastly overstated, some witnesses said. Mazda started a covert blog to create interest in its cars, but when the effort was unmasked “the response was brutal,” Moulitsas said. DailyKos.com would fall quickly if Moulitsas lost his credibility, regardless of how much he spent, he said. If Viacom had poured millions into online ads defending its beleaguered anchor Dan Rather, it wouldn’t have made a difference, Krempasky said. Comr. Danny McDonald responded that an online campaign’s “success level” is irrelevant to its regulatory status, noting millions of dollars are spent on losing campaigns: A campaign “has to be measured for what kind of impact you were trying to have.” Moulitsas retorted: “We can drown out by sheer numbers” all the money corporations and unions would pour online.

Commissioners posed other questions to witnesses. Comr. David Mason asked if the Internet itself qualifies as a “facility,” making anything said on it protected speech. Morris said a printing press can be used for non- media purposes, and the real distinction is who is speaking online. Weintraub expressed alarm at the possibility of regulating state political party websites for how much web page space a particular candidate gets, which changes constantly. “You're going to have to do that” anyway, even if it’s logistically confusing, Noble said. Elias said fraudulent solicitations from websites posing as campaigns are an actual problem, unlike corporate abuse of blogging, and asked the FEC to vest authority in a staffer who could ask ISPs and hosting companies to remove fake campaign sites. Stoller called proposals to limit the number of recipients in political e-mails pointless, as users will complain to ISPs if they're getting political spam.