FEC Exempts Unpaid Broadcasts, Charities from New Rules

The Federal Election Commission (FEC) approved final regulations on September 26 implementing a ban on broadcasts by corporations (including nonprofits) and labor unions that refer to federal candidates within 60 days of an election or 30 days of a primary. The FEC used its authority under the Bipartisan Campaign Reform Act of 2002 (BCRA), which directed the ban, to carve out two important exceptions: free air time and broadcasts by charitable, educational and religious groups that are exempt under Section 501(c)(3) of the tax code. The final rule has not been published. FEC's draft rule contained no exemptions, arguing that any reference to a federal candidate broadcast during an election cycle is likely to have some impact on the election. However, when the FEC commissioners met to discuss and vote on the draft, several amendments were proposed. Commissioner Scott Thomas, a Democrat, proposed an exception for broadcasts of grassroots lobbying that would permit mention of the candidate’s name when urging him or her to take a position on pending executive or legislative matters, but would not permit mention of the candidate’s position on the issue, party affiliation, or fitness for office or the election. This exemption would have applied to any nonprofit, corporation or labor union. It was defeated on a party line vote; by law, three of the commissioners are Democrats and three are Republicans. Republican Commissioner Bradley Smith proposed several amendments, including one exempting 501(c)(3) organizations from the ban, as did Democratic Commissioner Karl Sandstrom. By the end of the day the Commission voted 4-2 to exempt 501(c)(3) organizations from the rules. There are no lobbying or similar exemptions for other types of nonprofits. At the public hearing many groups urged the Commission to create exemptions that would protect nonpartisan speech. OMB Watch and the Alliance for Justice argued for the exemption for 501(c)(3) organizations, noting that the tax code prohibits these groups from supporting or opposing candidates. The new rules will become part of the record considered by the Supreme Court in a lawsuit challenging BCRA's constitutionality. The FEC action will weaken arguments that the law infringes on free speech rights, since the broadcast ban is now clearly targeted at the kind of soft-money-funded attack ads that flooded the airwaves during the 2000 election. The next phase of rulemaking under BCRA involves the definition of prohibited coordination between candidates, campaigns and parties and outside entities, such as advocacy groups and labor unions. Coordinated expenditures can be considered illegal campaign contributions. For more information on the proposed coordination rule see the September 16 issue of the Watcher.
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