FEC Issues New Electioneering Communications Rules for Corporations and Labor Unions
 
January 11, 2008
 
Christopher "Chris" DeLacy- Washington

Just in time for the 2008 elections, corporations and labor unions may now pay for certain election-related advertisements that had been prohibited since 2002. On December 26, 2007, the Federal Election Commission (FEC) published its final rule on “electioneering communications.” This rulemaking implemented the U.S. Supreme Court’s decision in FEC vs. Wisconsin Right to Life, Inc. (WRTL) which ruled the electioneering communications provisions of the Bipartisan Campaign Reform Act of 2002 (BCRA) – also referred to as “McCain-Feingold”– were unconstitutional. If carefully followed, these new electioneering communications rules provide corporations and labor unions with an additional way to participate in federal elections. Please note that this new rule only applies to electioneering communications and does not alter other campaign finance regulations as they apply to corporations and labor unions.

Electioneering Communications

Under BCRA, corporations and labor unions were banned from paying for “electioneering communications” – a new class of political advertisements created by BCRA. Electioneering communications are defined as any broadcast, cable or satellite ads that refer to a federal candidate within 30 days prior to a primary or preference election (including party conventions), or 60 days prior to a general, special or runoff election, and in the case of congressional races are targeted to the relevant electorate (reaching 50,000 or more persons in the federal candidate’s congressional district for a House of Representatives election or state for a Senate election). BCRA created this blackout period as a way to provide some certainty to the issue of express advocacy vs. issue advocacy. After BCRA, it no longer mattered whether the communication was express or issue advocacy if it was an electioneering communication.

Express vs. Issue Advocacy

“Express advocacy” is a communication that urges the election or defeat of a clearly identified candidate. The term derives from a 1976 U.S. Supreme Court opinion in Buckley v. Valeo, which upheld portions of a law imposing limits on campaign contributions. In Buckley, the Court allowed federal regulation of ads that “in express terms advocate the election or defeat of a clearly identified candidate for federal office.” In contrast, regulation of “issue advocacy” was generally forbidden by the Buckley court. “Issue advocacy” is the discussion of campaign-related issues that stops short of express advocacy.

• “vote for”
• “elect”
• “support”
• “cast your ballot for”
• “Smith for Congress”
• “vote against””defeat”
• “reject”

While criticized as being meaningless, these examples became known as the “magic words” test and served as the basis for determining whether an ad represented express or issue advocacy until passage of BCRA. The electioneering communications provisions contained in BCRA were drafted in response to criticism of the magic words test and were intended to provide certainty.

Corporations and labor unions may not pay for express advocacy outside of their restricted classes (stockholders and executive or administrative personnel and their families for corporations and members and executive or administrative personnel and their families for labor unions). This prohibition has been in place since Buckley and remains in effect today. In contrast, corporations and labor unions have always been allowed to pay for issue advocacy. However, after enactment of BCRA, corporations and labor unions could no longer pay for issue advocacy during the electioneering communication blackout periods. Now, after WRTL and the recent FEC electioneering communication rulemaking, the landscape has changed again.

Wisconsin Right to Life

Although the U.S. Supreme Court originally upheld the BCRA electioneering communications provisions in a facial constitutional challenge in McConnell v. FEC, it struck down the same provisions in an as applied challenge in WRTL. In WRTL, the Court held that restricting corporate or labor union issue advocacy was unconstitutional unless the speech is “susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.” The Court essentially replaced the certainty provided by the electioneering provisions contained in BCRA with its own “no reasonable interpretation” test.

New FEC Electioneering Communications Rule

The new FEC electioneering communications rule applies the WRTL “no reasonable interpretation test” to its existing electioneering communications rules. The new rule allows corporations and labor unions to make electioneering communications, as defined by BCRA, unless the communication is “susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.” The FEC provides a safe harbor for communications that:

• do not mention any election, candidacy, political party, opposing candidate, or voting by the general public;
• do not take a position on any candidate’s or officeholder’s character, qualifications, or fitness for office; and
• either:

- focus on a legislative, executive, or judicial matter or issue and urge a candidate to take a particular position or action with respect to the matter or issue; or
- urge the public to adopt a particular position and contact the candidate with respect to the matter or issue; or
- propose a commercial transaction, such as the purchase of a book, video, etc.

If a communication does not qualify for the safe harbor, the FEC will consider whether the communication includes any “indicia of express advocacy” and whether the communication has an interpretation other than as an appeal to vote for or against a clearly identified federal candidate. A communication includes indicia of express advocacy if:

• it mentions any election, candidacy, political party, opposing candidate, or voting by the general public; or
• takes a position on a candidate’s or officeholder’s character, qualifications, or fitness for office

Reporting Requirement

Corporations and labor unions that make electioneering communications aggregating in excess of $10,000 in a calendar year must file statements with the FEC.

Conclusion

Like many areas of campaign finance law, the situation surrounding electioneering communications is fluid. It is unclear how the FEC will apply its new electioneering communications rules to actual electioneering communications paid for by corporations and unions during the 2008 election and beyond. In fact, at the time of this writing, it is unclear if the FEC will function as an agency during the 2008 election and beyond. There are currently only two active commissioners, and at least four commissioners are required for the FEC to act. What is clear is that corporations and labor unions have had a significant option restored that provides an additional legal choice for their participation in federal campaigns. While caution is essential when it comes to electioneering communications, it is something corporations and labor unions may want to consider. Please consult with the FEC and with counsel prior to paying for any electioneering communication.

For more information on campaign finance issues, email Christopher DeLacy at chris.delacy@hklaw.com or call toll free, 1.888.688.8500.

For more information on telecommunications issues, email Reg Leichty at reg.leichty@hklaw or call toll free, 1.888.688.8500.