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HOME / ABOUT THE FEC / COMMISSIONERS / FORMER COMMISSIONERS / COMMISSIONER DAVID M. MASON / SPEECHES AND ARTICLES

The Internet and Campaign Finance Regulation

 

Testimony of David M. Mason 

Commissioner, Federal Election Commission

before the Committee on Rules, United States Senate

May 3, 2000

I appreciate the opportunity to appear before the Committee on Rules to presenttestimony on the Internet and campaign finance. I am presenting my testimony as one Memberof the Federal Election Commission, and am not representing the views of the Commission asa whole or of any of my colleagues.

"The Internet is ‘a unique and wholly new medium of humancommunication,’" (*Reno v. ACLU*, 521 US 844, 850) deserving of the highestlevel of First Amendment protection. (*Id*. at 870)

As one who holds that political speech deserves at least as much constitutionalprotection as prurient images, I find it notable that the Supreme Court, in severelylimiting the government’s ability to regulate indecent speech on the Internet, leftopen the argument that "the First Amendment denies Congress the power to regulate thecontent of protected speech on the Internet [at all]." (*Id*. at 863 and FN30).

There is a substantial basis to argue that political speech on the Internet should bewholly unregulated. I want to acknowledge this at the outset because the remainder of mytestimony proceeds on the assumption that federal election law will apply to Internetactivity, perhaps under significantly more lenient interpretations, but still more or lessas it applies to traditional print and broadcast activities.

I would be delighted if Congress or the courts largely exempted Internet activity fromthe restrictions of federal campaign finance law but, in the absence of such a decision bythose authorities, the task of my agency, the Federal Election Commission, is to apply thelaw with appropriate allowances for the nature of the medium. This can mean theapplication of exemptions as well as restrictions, as, for instance, when the Commissionexpanded the media exemption to include cable TV operators (11 CFR****100.7(b)(2) and100.8(b)(2)) along with broadcasters and print publishers mentioned in the statutoryexemption (2 USC 431(9)(B)(i)) in the Federal Election Campaign Act (FECA).

 **The Internet and Campaigns

Discussion of the Internet as a force in politics is marked by millennial optimism,both as to its utility to campaigns and as to the prospect that the Internet will changethe political process significantly, empowering individual citizens, leveling the playingfield, and dethroning special interests. I note with caution, however, that theseidentical goals were professed by original supporters of the FECA, though they sought toachieve them through regulation rather than liberty.

The uses of the Internet in campaigns is still in an early stage of development.Despite the hype surrounding Internet use by the Bradley and McCain campaigns, theInternet thus far has arguably had no more effect than the development of direct mail inthe 1970s, and certainly less, at least to date, than the introduction of television.There is no Internet application to compare, for instance, to the Kennedy-Nixon debates orto Lyndon Johnson’s "daisy" ad. The most significant Internet uses thus farhave been in the very traditional realm of campaign fundraising, the one area of Internetactivity which nearly everyone agrees should be regulated.

While I support maximum freedom for Internet activity, I remain unconvinced that theInternet will change politics or political outcomes as rapidly or as significantly asenthusiasts predict. It is particularly important, in my view, to avoid basing a policy ofregulatory leniency on the presumption that the Internet is a source of unalloyedpolitical good. As the *Reno* case reminds us, the Internet hosts pornography asoften as it houses public affairs; it is used by fast-buck artists as much as byhigh-minded public policy organizations. Hackers, thieves, and sexual predators shouldremind us that the Internet is not inherently "better" than other communicationstechnologies. The Internet is a powerful tool which can be used for the good of society. Ibelieve its potential for good will be best fostered by regulatory restraint rather thanby government efforts to shape and control the medium.

The Internet may not be more naturally beneficent than other communicationstechnologies, but it is different. There are numerous difficulties in analogizing Internetactivity to traditional political activity. These may persuade you that attempting toregulate political activity on the Internet is, for the most part, inadvisable, butexploring those difficulties and considering regulatory choices is the purpose of thishearing. There are three fundamental assumptions of campaign finance law which may notapply on the Internet:- that the number of "speakers" (regulated entities) is relatively limited;
- that mass communications are relatively costly; and,
- that speakers are easily categorized.

 **Inter-activity and Unlimited Numbers of Speakers

In requiring disclaimers, disclosure and registration for those undertaking politicalcommunications to the public, the FECA assumes that there will be a limited class ofspeakers – mostly campaigns, political parties, and other political committees –communicating to the public at large: a few will speak, most will merely listen. Byoperation of the Act, groups spending over $1,000 on political communication are politicalcommittees and individuals spending as little as $250 must file reports with the FEC.

On the Internet, however, those listening can respond and not merely by return e-mailor in a chat room. Quite easily and at relatively low cost, listeners can establish theirown platforms and become speakers themselves. The capacity of the Internet is nottheoretically limited, and the barriers to entry are quite low. The fact that virtuallyeveryone can respond, and that many actually do, brings into question the assumption thatnearly every political speaker addressing comments to the public should or can be subjectto regulation, required to register, report and include disclaimers.

 **Low Costs

Relatively low absolute costs and extremely low marginal costs also present significantdifficulties in regulating Internet activity. The government may not regulate politicalspeech *per se* we can require disclaimers and regulate communications because fundsare spent on the communications, and those funds may be a potential source of corruption.When the cost of speech is so low as to be insignificant, the government’s interestin preventing corruption becomes similarly insignificant. *Buckley v. Valeo* assumedthat "virtually every means of communicating ideas in today's mass society requiresthe expenditure of money," and concluded that "the electorate's increasingdependence on television, radio, and other mass media for news and information has madethese expensive modes of communication indispensable instruments of effective politicalspeech." (424 U.S. 1, 19) These assumptions may not be valid on the Internet and maybe less valid generally to the extent that the Internet replaces other communicationtechnologies in campaigns.

Marginal costs are so low on the Internet that users do not normally attempt to accountfor the volume of use (speech) except in the largest increments and, even then, usually onan aggregate basis. Once an appropriate connection is established, there is no usefullymeasurable cost difference between sending a single e-mail message and 1,000 identicalmessages.

 **Blurring Identities

The FECA requires categorization of speakers as political committees, corporations,unions, and the media, which is largely exempt from the requirements of the Act. Who orwhat constitutes the media on the Internet is difficult to determine. Not only has theInternet spawned non-traditional media, it is difficult to identify a principled basis onwhich to distinguish an individual’s home page containing political opinions from theInternet activities of traditional publishers. In *Reno v. ACLU* the Courtincorporated a district court finding of fact that:

Any person or organization with a computer connected to the Internet can    "publish" information. Publishers include government agencies, educational    institutions, commercial entities, advocacy groups, and individuals. (at 853)

subsequently concluding that:

This dynamic, multifaceted category of communication includes not only traditional    print and news services, but also audio, video, and still images, as well as interactive,    real time dialogue. Through the use of chat rooms, any person with a phone line can become    a town crier with a voice that resonates farther than it could from any soapbox. Through    the use of Web pages, mail exploders, and newsgroups, the same individual can become a    pamphleteer. (at 870)

Arguably then, anyone posting information on the Internet is a "publisher,"as much entitled to the FECA’s media exemption as television networks and majornewspapers.

Even the definition of "home" is less than perfectly clear on the Internet asthe Commission discovered in attempting to interpret the volunteer exemption to cover webpages published by campaign volunteers. (AO 1999-17) The Commission applied an exemptionfor the use of personal property in the home of a volunteer to web sites despite the factthat most individual web sites are not stored on personal computers in the home of avolunteer but on the servers of ISPs, from whom the volunteers are essentially rentingspace.

 **Commission Conclusions

The Commission first addressed the Internet specifically in 1995 (AO 1995-9), but hadissued only four advisory opinions and one significant enforcement action before lastyear, when we issued nine advisory opinions addressing Internet issues. The increasingvolume of Internet-related inquiries and the difficulty in deriving valid generalprinciples from some early actions led the Commission to issue a Notice of Inquiry raisinga broad variety of issues regarding the FECA and the Internet last year. The Commission iscurrently evaluating those comments and considering whether to propose specificregulations (including exemptions) regarding the use of the Internet for federal campaignactivity.

Underlying the Commission’s treatment of the Internet to date (beginning withAdvisory Opinion 1995-9, NewtWatch PAC) is the treatment of open Internet postings as"general public political advertising," a significant holding since that phraseoccurs eight times in the FECA and 17 times in the Commission’s regulations. Thiseffectively prohibits corporations and unions from posting certain political informationand potentially subjects to regulation anyone expressly advocating the election or defeatof a candidate on the Internet. This determination is generally consistent with courtdecisions holding that open Internet postings constitute making information public. In aFECA context, however, this rule may lead to unnecessarily restrictive results:- For instance, the Commission permits limited distribution of corporate and union press    releases containing political endorsements, but prohibits posting of those press releases    on web sites.
- Unions and membership organizations may include endorsements in internal publications    but may not then post those publications on their web sites, except with password    protection. ( See  MUR 4686 (New York State AFL-CIO) and AO 1997-16)
- Corporations have had difficulty even in using Intranets, access to which is restricted    to employees, to provide basic PAC information due to the Commission’s interpretation    of what constitutes a "solicitation" for the PAC which may only be directed to a    restricted class of employees.

The Commission initially considered web links to candidate web sites to becontributions to the campaign, the equivalent of endorsements. (*See*, e.g. MUR 4340)More recently, however, the Commission has looked at the context of the links (forinstance, on non-partisan pages linking to all candidates in a given race, AOs 1999-7,1999-24, 1999-25) or at the practice of the referring page (if an organization does notnormally charge for links, a link to a candidate page would not be a contribution, AO1999-17).

My individual view is that in proceeding further regarding links, we should simplydisregard the link *per se* and focus on the placement of a link or the message it isembedded in. In most instances the differences between a commercial banner ad (for whichsome charge is normally made) and a link included for the convenience of the reader isobvious. In the case of ads (which on the Internet almost invariably include links) thecharge made is normally for placement and a message rather than for the link itself.

Looking forward, the most difficult issue the Commission is likely to face in the nearfuture concerns Internet sites containing express advocacy or soliciting funds forcandidates, other than those maintained by political committees or those eligible for thevolunteer or other exemptions. At least one Internet-based group, Move-on.org, chose toregister as a political committee after an early response to its political appeals. Sooneror later, however, the Commission is bound to encounter non-exempt individual ororganization Internet sites which include express advocacy, solicit contributions orappear to be the fruit of coordination with candidates. At that point the Commission willhave to address what portion of the Internet activities are subject to regulation (forinstance, whether we apply something akin to a major purpose test to an Internet site) andhow to value those activities. 

I understand, for instance, that some political "portal" sites areconsidering offering their users an option to contribute to virtually any candidatethrough the portal site. It is not clear what sort of arrangements with candidates thesites contemplate, but that idea that corporate-owned sites may be facilitatingcontributions to candidates under the corporate name and using corporate facilities, evenif they have a system for charging campaigns, seems to implicate the corporatecontribution ban in a fairly fundamental way.

 **Issues for Legislation

S. 1747. The Internet Freedom Protection Act, introduced by Senators Bennett, Burnsand McConnell, would add an exemption from the definition of "expenditure" forvoluntary individual Internet communications. The Commission has recently interpreted thevolunteer exemptions in the contribution definition (431(8)(B)(i) and (ii)) to reach asimilar result. Enshrining this protection in the law would be helpful: it is better forCongress to establish policy than to delegate it, and a statutory exemption would providea firmer basis in the courts and protect against potential regulatory backsliding. Inaddition, S. 1747 would also have the beneficial effect of clearly relieving independentInternet efforts by individuals from potential disclaimer obligations, a step theCommission may have difficulty achieving without legislative authority. 

I would offer two comments on S. 1747. First, it addresses only individual expressionsof personal opinions, excluding solicitation, paid advertising and work done for pay. Inthis respect it is far more modest than many suggestions the Commission received inresponse to its Notice of Inquiry. I would urge Congress to take additional steps toprotect Internet use by voluntary organizations and to consider even broader exemptionsfor use of the Internet by all speakers.

Second, I know the sponsors do not intend to imply that Internet activity which may notbe protected by the individual exemption proposed in S. 1747 is automatically subject toregulation. Exemptions for volunteers, non-partisan activities, the media, and others, aswell as the threshold requirements for FEC jurisdiction still apply. While this principleought to be obvious, my experience with arguments presented at and to the Commission tellsme that Congress should make this point explicit in the legislation or prominently in thelegislative history.

**General Public Political Advertising.** The Commission has opened for comment inits Notice of Inquiry on the Internet the question of whether open web postings should beconsidered a form of general public political advertising equivalent to TV and radio ads,billboards and direct mail. Congress may wish to consider this issue as well. My own viewis that it may be useful to distinguish between posting information on the Internet ,onthe one hand, and expenditures made to advertise a site or its content, on the other:allow anyone to post whatever they wish, and bring campaign finance laws into play onlywhen they advertise. Obviously, as with the current media exemption, campaign web postingswould not be exempt and some consideration as to the treatment of corporate and union websites (particularly those with a major web presence) would be necessary. In *Reno v.ACLU* the Supreme Court held to be of constitutional significance the DistrictCourt’s finding that ""[c]ommunications over the Internet do not `invade'an individual's home or appear on one's computer screen unbidden. Users seldom encountercontent `by accident.' " (521 US 869). Thus, simple publication (as opposed toadvertising or e-mailing) of material on the Internet may be more akin to a pre-printedletter in response to a common request than to a direct mailing. 

If a distinction were adopted in the law between Internet publication and Internetdistribution (through e-mail or advertising), all persons and organizations would be freeto publish as they choose for those Internet users who seek information, but would beregulated to the extent that they advertised or affirmatively circulated politicalmaterial. The Commission may have already achieved roughly this result for personal webpages through an interpretation of the volunteer exemption, but a different regulatoryapproach, or legislation, may be necessary to extend similar protection to voluntarygroups of persons, corporations or unions.

**Reporting Thresholds.** Recognizing the difficulty in valuing Internet activity,Common Cause has recommended in its comments on the Internet NOI that Congress consider aspecial $25,000 exemption for Internet activity. This is another potentially usefulapproach to protecting most Internet activity, though it would not settle the question ofhow to value Internet activity generally or what standards might apply above thatfinancial threshold. I believe the proposal to increase thresholds might better be appliedmore generally. Just as inflation has eroded the effective contribution limitssignificantly, the $1,000 threshold for political committee status and the $250independent expenditure reporting requirement are set at levels which now appearrelatively insignificant. If those thresholds were adjusted to, for instance, $5,000 forpolitical committee status and $1,000 for reporting independent expenditures, most smallscale Internet activity would be protected, as would similarly small scale non-Internetactivity. While Internet publication may deserve specific protection, it is difficult tojustify treating $25,000 in Internet advertising differently than $25,000 in radioadvertising or direct mail.

**Disclaimers.** Because communications containing express advocacy are generallyrequired to include disclaimers, even when they may be exempt from reporting requirements,Internet publishers may face disclosure requirements even when they do not have to reportor register with the Commission. Congress should consider exempting expenditures whichfall below the independent expenditure reporting threshold from disclaimer requirements aswell. As noted, S. 1747 would address this issue as to Internet activities of individuals

 **Conclusion

I agree with most of those commenting on the Commission’s Internet Notice ofInquiry, including Common Cause which traditionally advocates a strict approach tocampaign finance laws, that the Commission and Congress should approach the Internet so asto provide the highest level of freedom and flexibility possible. In my view that goalwill best be served in the near future through an incremental approach, attempting toregulate Internet activity only when a clear and specific need appears. Forgoingregulation of political speech on the Internet may allow us once again to prove theprinciple that "governmental regulation of the content of speech is more likely tointerfere with the free exchange of ideas than to encourage it." (*Reno v. ACLU*,521 US 885)

Internet-specific legislation should not be written so as to freeze developingpolitical uses of the Internet or to create adverse presumptions regarding activity notspecifically exempted. Ideally Congress should adopt a very broad exemption, excludingInternet publications from the definition of general public political advertising. I hopethat Congress will support the Commission in a generous application of existing FECAexemptions to Internet activity and will indicate that the Commission should view newInternet-specific exemptions as adding to, rather than restricting, those existingexemptions.**************