March 4, 2014

Last Week at the FEC: Deadlock on Revolution Messaging

Holland & Knight Eyes on Washington Blog
Andy Emerson

Last week the Federal Election Commission met in executive session on Tuesday, February 25, and in open session on Friday, February 28. During its open session, the Commission continued to deliberate on two opposing draft Advisory Opinions responding to mobile advertiser Revolution Messaging, but ultimately deadlocked and was unable to issue an opinion. 

The Commission also deferred discussion on a draft advisory opinion responding to Advisory Opinion Request (AOR) 2014-01, a request from the Solano County United Democratic Central Committee discussed by this blog last week, made public the results of a number of Matters Under Review (MURs), and released sharply divergent comments from Republican and Democrat-appointed  Commissioners on a Notice of Proposed Rulemaking (NPRM) from the Internal Revenue Service (IRS) related to "Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities."

Deadlock on Revolution Messaging

The Commission was unable to secure the four (4) votes necessary to issue an opinion in response to AOR 2013-18, in which Revolution Messaging, LLC requested that the Commission determine whether mobile phone banner advertisements for political committees are exempt from disclaimer requirements based on the small item or impracticability exceptions to that requirement.   

Despite Revolution Messaging's attempt to supplement its proposal in early February, the Commission remained deadlocked on whether mobile banner advertisements were required to meet the disclaimer requirements contained in Commission regulations at 11 CFR 110.11. The Commission's three Republican appointees argued in favor of revised Draft B Opinion, which would have found mobile advertisements to be exempt from disclaimer requirements under the small items exception. However, the Commission's three Democrat appointees preferred Draft A Opinion would have rejected Revolution Messaging's proposal, instead finding that it "does not propose an alternative method of delivering a disclaimer" bur rather "entails ‘dispensing with, or truncating' the disclaimer," an approach the Commission previously rejected in AO 2007-33 (Club for Growth PAC).

Although the Commission's failure to adopt either proposed opinion results in continued ambiguity in this area, the Democrat-appointed Commissioner's did issue a separate Statement for the Record defending their decision, which points out the Commission's approval of "creative new ways" to satisfy the disclaimer requirement. Specific examples they highlight include the "landing page" approach approved in Advisory Opinion 2010-19 (Google) and the use of rollover displays in web advertising (though it is unclear how the Commissioners' believe that the latter could be applied in a mobile setting).

Notably, while ambiguity remains, the Commission's inability to breach the four-vote threshold on this issue provides a measure of security for mobile advertisers who wish to move forward without disclaimers. Without four votes on either side the Commission cannot bring an enforcement action, resulting in mobile advertisements remaining largely unregulated absent a change in one of the Commissioners' position.

Opposing Comments on Proposed Guidance from the IRS

Last week the Commissioners also disagreed on how the IRS should move forward with its proposed "Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities."

The Commission's Republican appointees released comments that focused on the Federal Election Campaign Act's admonish that the IRS and FEC collaborate to "promulgate rules, regulations, and forms which are mutually consistent" and called on the IRS to harmonize its proposed definition of "candidate-related political activity" with the Commission's existing regulations and guidance. In contrast, two of the three Democrat-appointed Commissioners released comments indicating that the IRS need not defer to the FEC when determining "what constitutes ‘political activity'" and pointing out that the Commission itself remains divided on that issue.

Commissioner Steven T. Walther, the third Democrat-appointed Commissioner, did not sign on to either statement.

Meeting Schedule

The Commission is scheduled to meet in executive session today, Tuesday, March 4, and to hold an open meeting on Thursday, March 6. The agenda for the open meeting indicates that the Commission is set to discuss AOR 2014-01 (Solano County United Democratic Central Committee), to make technical corrections to its regulations, and to consider proposed final audit reports related to the Dallas County Republican Party, the Republican Party of Iowa, the Vermont Democratic Party, and the Democratic Party of South Carolina.  

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