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By krempasky Posted in FEC — Comments (13) / Email this page » / Leave a comment »

We could also subtitle this, "Brad Smith was right."

Thanks to RS'er Alex Kowalski, we have a transcript of FEC Chairman Scott Thomas's remarks from the Politics Online Conference at George Washington University on Friday, March 11, 2005. The video is available here, and the full text is below the fold.

To get a feel for how seriously Chairman Thomas takes us, consider this:

"Again, no distinction was made between ‘Saddam Hussein Missile Corporation’ coordinating with a candidate to pay for a $1 million dollar hard-hitting video clip sent to every voter in every battleground state, and, on the other hand, ‘Billy Blogger,’ wearing his Lyndon LaRouche volunteer badge and toiling for hours late at night in his basement...to post his well-reasoned diatribes on his website that cost no more than $25 bucks to create. "

TRANSCRIPT of FEC Chairman Scott Thomas at the Politics Online Conference – Friday, March 11, 2005

I was not in a politically hot state this past election. I live in D.C., so actually I was not in a state at all, but that’s another speech. [laughter, applause] The point is, I wasn’t getting much of the political traffic. Moreover, as an FEC commissioner, I don’t get on a lot of uh, lists. So I’m probably less literate about the state of Internet politics than activists in say, Ohio or Florida. But, to turn a phrase, I’m from the government and I’m here to learn.

I’m also largely here to serve as a “pooper scooper” of sorts for my friend and colleague, uh, I’m calling him “Loose Lips Brad Smith.” [laughter] He dropped quite a ...pile...the other day. [laughter] Uh, I gather that ah, Commissioner Mason yesterday cleaned up a little bit but I...I hope to clear away even more of what I will call...”fecal material” perhaps, [deadpanning] F.E.C.a.l.??? [laughter, groans]

[Cough.] Why is there a whiff of controversy? Well, it’s because after BCRA, the FEC as I see it was sloppy in crafting regulations that dealt with Internet activity. Admittedly under a lot of time pressure, the FEC adopted uh, an overly broad, blanket exception for all Internet activity -- no matter who was paying for it, or how much was spent. It allowed party committees to spend unlimited amounts of soft money on production and consultants for flashy video clip attack ads sent to millions via listservs. It allowed corporations, unions, ‘Saddam Hussein Missile Corporation,’ you name it...to spend unlimited amounts of prohibited source money on the same kinds of things, uh, in..same kinds of things in complete coordination with benefiting candidates. That’s right -- the candidates could supervise production of the video clips and pick the addresses uh that..uh, it, that would receive it. And the corporations, the unions, etcetera, could pick up the entire tab – no matter how big.

Now how does that square with the restrictions at the heart of McCain-Feingold?

The answer is: It doesn’t.

No surprise, then, that the backers of the legislation sued the pants off the FEC. No surprise that the judge said: [southern accent] “Whooooaaa, there pardner...you kinda messed up! You whittled some mighty big loopholes....you gotta go back and redo them ‘thar regs!!”

The judge didn’t say to clamp down on bloggers. Didn’t say, “...take away everyone’s home computers if they want to send emails about candidates.” The judge just told the FEC the obvious:

“Your regs., that totally exempt even high-cost Internet-based communications from the party soft-money rules and the Coordinated Communication rules, are way too broad. They run counter to the statute Congress just passed. Go fix it.”

Now, there were three commissioners who agreed with our general counsel that we should not appeal the Judge’s decision, and instead that we should take this opportunity to repair the regulations and do a better job.

Now, I, I don’t want to get too technical with you...but the FEC was dealing with statutory provisions that applied the party soft-money restrictions to [gestures air quotes] “public communications.” I love air quotes, don’t you? I always liked to...wonder..wha..what would’ve happened in the Clinton deposition if he had said something like, you know, “..it depends on what the meaning of ‘is’... is.” [groans, chuckles] Probably wouldn’t have made a difference.

But anyway, the, the term we’re dealing with is, “Public Communications.” This term was itself defined in BCRA to reach..quote “communications by means of broadcast, cable...” [aside] ...we’ve got a bit of a hum here, is that guy...bugging you guys? I don’t know what I need to do. Heh, is someone trying to tell me something? [laughter] I’m standing about as far back as I think I can.

Anyway, we’re dealing with a definition about ah, public communications, and it covers, uh: Communication by means of broadcast, cable, satellite, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone banks to the general public, or any other form of general public political advertising.

Now, how a mass mailing consisting of a dollar per letter could qualify as a form of general public advertising, but a party consultant’s Internet-based email to millions would not, is beside me. How an ad in the Laramie Daily Boomerang, out in Wyoming, could qualify, but a glossy video clip sent to a listserv going to a hundred times as many people would not, again, escapes me. But, the commission, really, I don’t think took enough time to make those kinds of distinctions. Uh, we didn’t try to distinguish between individual, volunteer party activists working on their home computers, and paid, professionally-prepared party epistles, uh, that uh, are very effective when party committees or, say, corporations want to distribute them widely.

The FEC adopted what I’m calling kind of a “blunderbuss exemption” for everything Internet-related. Then, when the FEC got to the new coordination regulations required by BCRA, it decided to incorporate the same “public communication” analysis used in the party soft-money rules. And that meant the same “blunderbuss exemption” for Internet communications was applied. Again, no distinction was made between ‘Saddam Hussein Missile Corporation’ coordinating with a candidate to pay for a $1 million dollar hard-hitting video clip sent to every voter in every battleground state, and, on the other hand, ‘Billy Blogger,’ wearing his Lyndon LaRouche volunteer badge and toiling for hours late at night in his basement...to post his well-reasoned diatribes on his website that cost no more than $25 bucks to create.

Now...if the medium was internet, the Coordinated Communication regs. simply weren’t going to touch it.

Now, when the FEC got to its disclaimer regulations, at least it started making some distinctions. It required that political committees reporting to the FEC include a disclaimer on their website saying who paid for the communication involved, and in most cases, whether it was authorized by some federal candidate. Further, for any persons making express advocacy or contribution solicitation communications, unsolicited emails to more than 500 recipients had to contain a disclaimer, saying who paid, and whether a federal candidate had provided authorization. And while the latter would have picked up a, an..would have picked up angry individuals working in their home, uh, on their computer sending ‘Redefeat’ Bush emails to a list of more than 500 friends who had never given any prior indication they wanted to be on any such list, in practical terms, that doesn’t happen very often. Even my very, very angry aunt Betty, an activist since the McGovern campaign doesn’t have 500 friends on her list. And for bloggers: Most won’t qualify as a political committee that must have a website disclaimer. And even those that display express advocacy or solicitation messages can escape disclaimer rules by working with a listserv where the recipients have indicated that they want to be on such lists.

But the basic point is that, in the disclaimer area at least, the FEC showed some perception of the types of practical distinctions that can and should be made when dealing with the intersection of the federal campaign finance laws and the internet.

So, now that the ball is back in the FEC’s court, what is it likely to do in this rulemaking? Well, there surely will be some consideration of regulating paid party corporate and union political advertising using the internet. This means that state and local party soft-money restrictions of BCRA and the Coordinated Communication rules, most likely will apply to the direct costs of pr..professionally prepared video clips that have easily ascertainable costs. On the other extreme, I doubt there will be any interest in treating what individuals do on their home computers as a coordinated communication. There is a very clear statutory exception for home volunteer activity, and the FEC has applied that consistently for several years now.

Now, I hope by the way, that there is some way to extend the “home volunteer” allowance to persons who may not be technically ‘volunteering’ for a candidate or party. Right now, there is no clear exception from the independent expenditure reporting rules for persons engaging in independent express advocacy activity. They technically have to report independent expenditures if the cost exceeds $250 bucks. Now, it’s peculiar to me that the FEC can regulate independent activity more than coordinated activity, but that’s kind of where we find ourselves, and I hope that we can repair that, that uh, that mess.

Now, as for bloggers: there are some “cute” questions, I would call them. Those who just work with home computers to post text, or add links will remain free from coordinated communication rules, I predict. But I have seen the stories about campaigns paying bloggers to run banner ads. Those payments probably are already being reported by the campaigns, and the bloggers probably can successfully argue that they’re just acting as small-scale commercial vendors with no FICA obligations. I’ve seen stories about campaigns simply paying bloggers to run favorable postings. Now, that gets close to the question of whether Armistead Williams stands to get even richer? Just kidding.

Seriously, that starts to drift between the blogger serving as a commercial vendor, and the blogger, on the other hand, becoming a [emphasis] political committee that must register and report its receipts and disbursements for federal election activity. That sounds pretty scary, I know, but the definition of political committee is:

“...a group that raises more than $1000 dollars in contributions for the purpose of influencing federal elections...or that spends more than $1,000 dollars in expenditures for the purpose of influencing a federal election.”

It’s a pretty broad definition. Now, mercifully the Supreme Court has uh, said that a group’s “major purpose” must be influencing elections before the FEC can regulate it as a political committee. Uh, so...most bloggers, I presume, will be able to avoid political committee status. But I have to say, it’s not a particularly clean area of law, and we may have to spend some energy looking at that ugly issue.

The disclaimer area for “non-political committee” bloggers still is governed by the statute which covers any form of political advertising that contains express advocacy or solicitation of federal election contributions. The FEC may explore whether some monetary cost threshold should apply, say, for websites or postings. This would allow bloggers, and those who post, and who know they have spent below the threshold, to avoid disclaimer obligations. The FEC will probably explore whether the current “more than 500 emails to unsolicited recipients” approach is functioning properly. As noted above, for bloggers that, that send messages to persons on a listserv where recipients have indicated that they want to be, uh, on a list, the current rule does not require a disclaimer.

So. I know there’s going to be lot of enthusiasm for exploring application of the media exemption to bloggers, or to internet-based news services. Uh, and I’m told I’m going to receive a letter to encourage me to look carefully at that issue today.

I was offered security by the way...and I...[laughter]...I, uh...[laughter] ...I tried to assure the folks at GW that that probably wouldn’t be necessary. Besides, I didn’t want to look quite as goofy as, say, Michael Jackson these days. [laughter]

But actually, I can’t wait to see the letter, and I can’t wait to see the legal analysis that uh, is contained in it. We have shown at the FEC a willingness to extend the media exemption to some internet-based news services. But this media exception inquiry will go to the question of: “What is a periodical publication?” and “What is a legitimate press function?” It will also get into: “What is news?”...“What is commentary?”...“What is editorial content?”

I hope that when we put proposed rules out for comment, we can get help on how to define these concepts so that we allow for press freedom, but without letting prohibited source funding creep through the door.

So, when the 24th of this month comes around, you’ll see what the FEC is thinking about in this area. We have this proposed rulemaking on the agenda. We’re planning to approve at that point a, a Notice of Proposed Rulemaking wherein we will seek comment. Uh, I assure you that we have not made up our minds on anything yet, and that there is no reason to assume gloom and doom. We recognize that the internet has the potential to convey information at little or no cost, and without the dangers that have led to the campaign finance restrictions. We also recognize that the regulations we adopt, if done sloppily, could lead to massive evasions of the prohibitions on party soft money and corporate and union resources in federal elections.

Final thought: Help us keep free speech, and clean politics.

Thanks.