The questions of federal election law applicability to Internet activity are myriad. Most center, however, on whether a candidate or political party is receiving something of value and, if so, how it is to be valued, when it must be reported, and what responsibilities the receipt imposes on the candidate or party. Federal election law sets limits on the amount individuals and PACs may contribute to federal campaigns and determines whether contributions or expenditures made by these groups must be reported to the FEC. It also prohibits contributions and expenditures "for the purpose of influencing a federal election" by corporations, foreign nationals, and government contractors. A "contribution" is defined as the provision of "anything of value" to a federal candidate or committee, while an "expenditure" is considered a payment made for the purpose of influencing a federal election. The difficulty, therefore, lies in determining how exactly these definitions apply to the use of the Internet.

The FEC held a public hearing on March 20, 2002 on issues raised by a Notice of Proposed Rulemaking dealing with the use of the Internet for campaign-related activity. Testimony and questioning centered on the unique nature of web pages and the difficulties in determining their value. The Commission indicated that this subject would require a considerable amount of additional work and research before rules can be promulgated. Accordingly, it concluded that, for the time being, it would not move forward on this issue until sufficient resources became available. Therefore, until this rulemaking is completed and regulations are enacted, the role of the Internet continues to be governed primarily by the patchwork of an ever-evolving set of Advisory Opinions that are periodically issued by the FEC. From these opinions, some governing principles can be discerned and are discussed below in the next section.

Although the FEC has yet to adopt comprehensive regulations dealing with the use of the Internet for campaign-related activity, Congressional passage of BCRA in 2002 did require the FEC to adopt implementing regulations that touched on Internet usage. BCRA defines the term "public communication" to include broadcast, cable, satellite and several forms of printed communication, but does not mention the Internet. The statutory definition does, however, contain the catch-all phrase, "or any other form of general public political advertising." The FEC adopted a regulation defining the term "public communication" identically to the BCRA definition, but adding a sentence after the statutory language reading: "The term public communication shall not include communications over the Internet."

BCRA's congressional sponsors, unhappy with the FEC's regulation defining "public communication" and many other BCRA-related regulations, filed a lawsuit against the FEC in federal district court alleging that the FEC regulations undermine the congressional purposes of BCRA. The district court ruled in September 2004 that the FEC's exclusion of the Internet from its definition of "public communication" undermines FECA's purposes and ordered the FEC to rewrite the regulation. The FEC is scheduled to conduct a new rulemaking on this subject during the first half of 2005, but until a new regulation is promulgated by the FEC, the regulation excluding Internet communications is in effect. The regulatory definition of "public communication" affects at least two areas of federal campaign finance law: (1) regulating expenditures coordinated between candidates and non-candidates, which are considered inkind contributions; and (2) determining what constitutes federal election activity and, consequently, must be paid for with funds raised pursuant to federal law. In other instances, the courts have agreed with the general United States policy of keeping "government interference in the medium to a minimum" in order to "maintain the robust nature of the Internet communications."xxv Thus, in Reno v. ACLU,xxvi the United States Supreme Court confirmed that Internet communications deserve a high level of First Amendment protection as it invalidated portions of the Communications Decency Act. In determining that these provisions were unconstitutional, the Court held that the Internet deserved more First Amendment protection than television or radio communications. It stated that justifications for regulation of speech in broadcast media, including its "history of extensive government regulation," "scarcity," and "invasive" nature, "are not present in cyberspace." The Court also noted that "the vast democratic fora of the Internet" have not been subject to the type of government regulation that has attended the broadcast industry.

LEGAL OVERVIEW OF FEC INTERNET REGULATION

As summarized above, federal election law operates on the presumption that communications to the general public about federal candidates cost money, and that spending may be prohibited, limited, and/or required to be reported. The entire complicated structure of the federal regulation of political activity by individuals, corporations and labor unions, and political committees is based on accounting for the amount spent. Congress assumed in 1975 that, without spending, political speech would consist merely of standing on a street corner and shouting, one of the few forms of public communication not regulated or reportable under the federal election laws.

The rise of the Internet as a medium of mass communication changes these fundamentals of communicating political speech. It thereby presents a conundrum for the FEC, the agency charged with interpreting and enforcing the federal campaign finance laws. Individuals can reach hundreds with list serves and blast e-mails, and organizations can mobilize thousands through a posting on a web site. For profit and non-profit organizations have sprung up to convey political news on the Internet, complete with links to candidate and party web sites, reprints of candidate materials, interviews and debates with candidates, and polling information.

One of the realities of the Internet is that there is usually no incremental cost to keystrokes, and thus none or little for e-mail, speech on web sites, and hyperlinks. Now that some on-line service providers routinely make web-site creation software available to subscribers as part of their regular service package, entire web pages can be created without any identifiable incremental costs. Without a cost to communication, current law has nothing to measure. Thus, the bans on corporate and labor spending for speech on behalf of federal candidates, and limits on in-kind contributions by individuals, are difficult to interpret in the Internet context. Moreover, the entire mechanism for disclosing political expenditures and requiring adequate information about the identity of the speaker is thrown into question as well.

One difficulty is that much of the FEC's regulatory apparatus is ill suited to the Internet. For instance, the FEC has traditionally presumed that there are identifiable costs for the purchase of advertising to reach the general public, that contributions to presidential candidates are only made by check, with signatures in ink on paper, etc. A greater problem for the FEC is that political speakers prior to the Internet were largely parties, candidates, and well-organized groups of persons, all at least passingly familiar with the federal election laws and FEC reporting obligations. Internet political speakers, by contrast, tend to include large numbers of individuals who are completely unaware that federal election law may reach their independent or volunteer activity. Internet speakers also increasingly include small newsletter publishers and news-based web sites, and private non-profit entities or governmental agencies, all of which assume that their activities by their very nonpartisan nature should be exempt from FEC requirements. The FEC's initial reaction (which has now significantly changed) was to declare that speech on the Internet DOES have a cost, and must be considered and quantified as "something of value" to a federal candidate. Logically, that led to the argument that the creation or use of web sites and pages for disseminating federal election-related speech (including news, commentary, and candidate information) should be subject to regulation under FECA. Likewise, providing a link to a federal candidate's web site would be subject to the federal election laws.

More recently, the Commissioners have taken a more accommodating and realistic view of political activity on the Internet. Commissioner Karl Sandstrom declared that "[i]n regulating the Internet, we should seek to unleash its promise. Only such regulation as is absolutely necessary to achieve the core purposes of the law is merited." More importantly, in Advisory Opinions issued to the Minnesota Secretary of State, Democracy Net, and Election Zone, the Commission concluded that nonpartisan activity on the web (loosely defined as providing campaign-related information and candidates' statements in a way which treats all candidates on an equal basis) is exempt from any FEC reporting requirements. In another Advisory Opinion, issued to the Bush campaign, the FEC found that Internet activity by campaign volunteers acting on their own need not be tracked and reported by the candidate's campaign committee. These new Advisory Opinions reflect a growing consensus at the FEC that Internet activity should not be burdened by traditional campaign finance regulation unless it involves the expenditure of large sums of money for overtly partisan political speech. The cumulative effect of these, and other, Advisory Opinions is discussed in greater detail below.

Nonpartisan Political Web Sites

In separate Advisory Opinions issued to the Minnesota Secretary of State, the Democracy Network ("DNet" was a non-profit entity), and Election Zone ("EZone" was a for-profit entity), the Commission declared certain nonpartisan Internet activity to be neither an expenditure nor a contribution. On the other hand, any web site that on its own behalf expressly advocates the election or defeat of a candidate or solicits contributions is subject to federal election laws and must, at a minimum, contain a disclaimer that includes the site sponsor's full name and whether the site was authorized by a particular candidate. In addition, if a web site owner provides a free link to a campaign web site, it is considered a contribution if the web site owner normally charges a fee for such a link. (See discussion below for the applicable contribution limits.)

The DNet Advisory Opinion confirmed that a web site, containing nonpartisan political information, created and operated by non-profit organizations was permissible, but declined to base its decision specifically on a combination of exemptions found in the Commission's regulations (such as the voter guide, press, or candidate debate exemptions). Instead, the Commission concluded, based on FECA, that the entire DNet web site as designed by Dnet was not an "expenditure in connection with a federal election" because it was "nonpartisan activity designed to encourage individuals to vote or to register to vote."

Within weeks of the DNet opinion, the Commission confirmed that the same "nonpartisan" exemption applicable to DNet's activity would apply equally to the same activity by a for-profit corporation which had a commercial web site.xxxviii The FEC in the Ezone opinion stated that it did not consider DNet's non-profit status as a determining factor in Advisory Opinion 1999-25, and instead focused on the fact that EZone "is not affiliated with any candidate, political party, PAC, or advocacy group," and that its candidate-related content would follow the same nonpartisan, equal treatment, approach as DNet's.

The Commission recently held that a nonprofit, nonpartisan corporation--whose purpose was to examine why young voters tend to be less involved in the political process-- could study the effect of Internet political advertising on different groups of randomly selected viewers, even though the ads expressly advocated the election or defeat of specific presidential candidates. The Commission determined that this provision of free advertising did not constitute an illegal contribution to the candidates but could not agree upon a rationale for this conclusion.

Republican Commissioners Wold, Mason, and Smith concluded that express advocacy of a candidate's election should be permitted on the Internet if it is clear from the stated purpose and structure of the communication that it is not for the purpose of influencing a federal election.

Democratic Commissioners McDonald and Thomas, on the other hand, found the study at issue fell within the exemption for "nonpartisan get out the vote activity."xl The FEC has based several Internet Advisory Opinions (e.g., Minnesota Secretary of State, DNet, and Election Zone) on this exemption. Of greater significance to the Internet community, the FEC Commissioners were unwilling to let their lack of consensus on a legal rationale prevent the approval of the Third Millennium request. This Advisory Opinion, therefore, reflects a continuing FEC awareness of the dynamic and developing nature of the Internet, and a desire not to hamper political activity on the web.

Political Web Sites Maintained By Individuals

An individual may participate in political activities over the Internet in countless ways but must be wary of the requirements and pitfalls associated with such activity. Thus, an individual may spend an unlimited amount of money creating a web site that discusses issues, legislation, and policy--and basically anything else provided it does not expressly advocate the election or defeat of a federal candidate--without subjecting herself to regulation by any federal election laws. She may instead spend an unlimited amount of money creating a web site expressly advocating the election or defeat of a candidate, provided she does not coordinate with a federal candidate or the candidate's campaign committee. In this case, however, the costs of creating and maintaining the web site are considered "expenditures," which trigger reporting requirements to the FEC if they exceed $250. Finally, she may create a web site expressly advocating the election or defeat of a candidate in coordination with a federal campaign committee. Because she coordinated with a campaign, the costs are considered "in-kind contributions" and are counted against her annual contribution limit of $2,100 per candidate per election.

If an individual is working as a volunteer for a political campaign, and the campaign does not control the specific volunteer activity, then the personal costs accrued by an individual using the Internet for campaign activity is not considered a contribution to the campaign. As such, these costs would not be counted against an individual's $2,100 contribution limit. A volunteer who is a corporate employee may also use corporate equipment to conduct campaign activity, provided such use is occasional, isolated, and incidental. Otherwise, the campaign must reimburse the costs of the campaign activity to the corporation. Finally, a volunteer who republishes speeches and issue papers by a candidate from the volunteer's home computer may do so without such re-publication being considered a contribution to the candidate's campaign.

Corporate And Union Use Of The Internet

Because federal election law prohibits contributions from corporations and labor unions, neither entity can provide free Internet services that are normally provided for a fee. Likewise, a corporation may not post its candidate endorsements on the web site of its supporting PAC unless access to the endorsements is confined to members of the corporation's restricted class. A corporation may post, however, a general description of its corporate PAC, and how to find additional information regarding the PAC, on web site locations for viewing by employees in or outside the restricted class provided there are no PAC solicitations posted. A corporation also may send a newsletter containing a PAC solicitation via e-mail to the secretaries of its executives, provided that a note informing the secretary that the material is intended for the executive accompanies the material. The publication of campaign material over the Internet by a corporation that is considered a news entity engaged in carrying out a legitimate press function is not considered a contribution, and therefore would not be prohibited under federal election law. This exemption does not apply to non-news entity corporations. Corporations engaged in the business of assisting political campaigns and PACs in fundraising over the Internet may do so provided that certain safeguards, such as payment at the usual and ordinary rate, are met.

Political Action Committees

Publicly available information on particular public officials may be posted on PAC web sites without triggering expenditure requirements beyond those already associated with the operation of PACs. Further, non-connected PACs (but not corporate PACs) may solicit contributions from the general public through a web site.lii Non-connected PACs may post political speeches that expressly advocate the election or defeat of a specific candidate and need only report the costs of doing so as overhead or operating expenses. Examples of these costs are expenses for registering and maintaining a domain name and web site hosting and any costs relating to the purchase and use of computer hardware and software. These expenses, however, must be reported as independent expenditures if they can be isolated and found to be directly attributable to a clearly identified candidate. Corporate PACs may engage in such general political speech as well, but must pay for it out of contributed funds only. A PAC sending e-mail that expressly advocates the election or defeat of a clearly identified candidate is engaged in independent expenditure activities that must be reported if the costs exceed $200.liv Likewise, if a PAC sends 100 or more e-mail containing express advocacy, the e-mail also must contain a disclaimer that includes the sponsor's full name and whether a particular candidate authorized the e-mail.

PACs may receive contributions via electronic employee payroll deductions provided their employees can electronically revoke or modify their deductions and that the employer keeps records of the transactions. A corporate or trade association PAC may also solicit its restricted class through a PAC web site, but it must ensure (by the use of a password or other security plan) that persons outside the restricted class do not have access to the solicitation.

Internet Political Activity By Federal Candidates

Fundraising Over The Internet
Individuals may contribute to political campaigns over the Internet by credit card or electronic check provided that the campaigns receiving the contributions have the appropriate safeguards in place. For presidential candidacies, such contributions are eligible for federal matching funds.

When soliciting contributions, federal candidate committees must include certain disclaimers (e.g., "Paid for by," not tax-deductible, and no foreign contributions permitted) and are also obligated to use their "best efforts" to obtain the name, address, occupation, and employer of each person who contributes more than $200 during a calendar year. The Commission has determined that a committee making a solicitation "may substitute e-mail communications for written or oral communications as a means of exerting best efforts to obtain missing contributor information where the original contribution was received through the Internet, or where the Committee has otherwise obtained reliable information as to the donor's e-mail address."

Disclosure of Sponsorship
Federal law requires campaign materials--whether printed or broadcast--that expressly advocate the election or defeat of a federal candidate to contain a disclosure statement that makes clear who paid for the ad. Thus, most candidate sponsored web sites bear a similar disclosure statement so as to limit the potential for confusion.