On Aug. 23, the Federal Election Commission (FEC) issued a Notice of Proposed Rulemaking (NPRM) stating the agency's intent to make its regulations consistent with the recent U.S. Supreme Court decision in FEC v. Wisconsin Right to Life (WRTL II). The FEC seeks public comment on two alternative proposals by Oct. 1. The FEC will hold a hearing on Oct. 17, and it plans to vote on a final rule by the end of November, in time for the presidential primaries. The difference between the alternative proposals is that one would require sponsors of grassroots, non-electoral broadcasts to file disclosure reports on their funding sources to the FEC; the other approach amends the definition of electioneering communications to allow issue advocacy and would not require disclosure to the FEC. In the WRTL II case, the Supreme Court ruled the electioneering communications provisions of the Bipartisan Campaign Reform Act of 2002 (BCRA) cannot be constitutionally applied to broadcasts that cannot be reasonably interpreted as appeals to vote for or against a federal candidate. (The law bans corporations, including nonprofits and labor unions, from paying for broadcasts that refer to federal candidates within 60 days of a federal general election or 30 days of a primary.) The Court's decision then left it up to the FEC to determine which ads, other than the ones considered in the WRTL case, would also be exempt from BCRA's electioneering communication restrictions. The FEC Proposal Each of the two alternatives proposed by FEC have some common elements. They provide a general exemption from BCRA, using language directly from the Court opinion, that says corporations and labor unions can pay for broadcasts that otherwise meet the definition of electioneering communications if "the communication is susceptible of a reasonable interpretation other than as an appeal to vote for or against a clearly identified Federal candidate." (p. 54-55) Under both alternatives, the FEC proposal provides a series of safe harbors. The safe harbor for grassroots lobbying exemption would protect a paid broadcast that:

"exclusively discusses a pending legislative or executive matter or issue"
• "urges an officeholder to take a particular position or action with respect to the matter or issue, or urges the public to adopt a particular position and to contact the officeholder with respect to the matter or issue."
• Does not include any reference to "any election, candidacy, political party, opposing candidate, or voting by the general public", and
• Takes no position about the officeholder's character or fitness for office.

The proposed safe harbor for commercial and business broadcasts contains similar factors, except it must refer to the candidate's business instead of pending legislative or executive decisions. Although the electioneering communications provision in BCRA only applies to broadcasts on television, radio, cable or satellite, the proposed rules refer generally to "communications" or "ads." This is misleading, since the rule has never applied to non-broadcast forms of communication, such as direct mail campaigns, newspaper ads or the Internet. The FEC's Background and Questions for Public Comment The proposal clarifies in the beginning that "electioneering communications are subject to both funding restrictions and reporting requirements" (p. 6) and that the WRTL II case only challenged the funding restrictions. As a result, the FEC seeks comment as to "whether the Commission has the authority to change its electioneering communications rules beyond what is required by the Supreme Court's decision." (p. 7) This is an odd question, since the FEC notes on page 3 that BCRA "specifically authorizes the Commission to promulgate regulations exempting other communications as long as the exempted communications do not promote, support, attack or oppose ("PASO") a candidate." That section of BCRA also specifically exempts broadcasts of announcements of candidate debates, forums and news. It is highly doubtful that the FEC would attempt to force news corporations to disclosure their shareholders names. The same logic should apply to any exempt electioneering communication, including grassroots lobbying and issue ads. The Proposed General Rule The Supplementary Information preceding the text of the proposed rule makes some clarifications and asks a series of questions about the general rule. In particular, it says, "a communication that does not qualify for either of the safe harbors may still come within the general exemption…" The FEC asks if it should include a list of examples of "background information", and if so, what they should be. It also asks whether it may look beyond the actual content of the broadcast. The Two Alternatives The FEC provides two alternatives. Under Alternative 1, FEC seeks input on whether to create a reporting requirement on broadcasts that are not express advocacy. The FEC's discussion of its disclosure proposal begins at page 41. Alternative 1 would require nonprofits, labor unions and corporations to file detailed reports naming every funder, donor or shareholder that contributes $1,000 or more "during the period beginning on the first day of the preceding calendar year and ending on the disclosure date" if they spent more than $10,000 on exempt grassroots lobbying broadcasts (p. 41). If an organization uses a separate segregated fund (SSF) for its grassroots lobbying broadcasts, it only would have to report the donors to that fund. The proposed disclosure requirement for Alternative 1 raises several serious issues that are inconsistent with the Supreme Court's holding in the WRTL II case. For instance:

• It would violate donor privacy for issue advocacy unrelated to federal elections, which was barred by the Supreme Court in the case NAACP v. Alabama.
• On a practical level, it leaves a nonprofit with two bad choices: either disclose donors for the entire organization or have the difficult job of separate fundraising for the SSF.
• FEC reporting for non-electoral activity would place a significant burden on free speech, contrary to the Supreme Court's warning to the FEC in WRTL II that its enforcement process must not be overly burdensome.

Under Alternative 2, the FEC proposes to modify the definition of an "electioneering communication." A communication qualifying for the exemption — that is a broadcast that is not express advocacy — would be exempt from the funding restrictions and would not be subject to the reporting requirements to the FEC. These communications would be construed as grassroots lobbying. The Proposed Safe Harbor for Grassroots Lobbying Safe harbors have a tendency to become de facto rules because of the certainty they provide. For that reason, it is important to look closely at the FEC's questions about its proposed grassroots lobbying safe harbor. On page 16, the FEC asks if it should take this approach at all. It asks if it should "instead of, or in addition to, creating safe harbors, provide an exhaustive or non-exhaustive list of factors to be considered." The FEC then provides a list of examples for each prong of the proposed safe harbor. For nonprofits engaged in issue advocacy and grassroots lobbying, the four criteria of the proposed safe harbor raise some concerns. For example:

• Prong 1 requires a broadcast to focus exclusively on a pending legislative matter. The practical problem with this is that a nonprofit might want to include a fundraising appeal or other non-electoral message in its broadcast. It should be able to do so. In addition, there is no definition of "pending." A nonprofit may want to push for consideration of a stalled bill, which should be protected under the WRTL II decision.
• Prong 2 requires the broadcast to urge an officeholder to adopt a position or ask the public to contact him or her and ask to adopt that position. This excludes appeals to contact a federal candidate who is not an officeholder. Non-electoral issue ads could potentially refer to such a person.
• Prong 3 bars the ad from mentioning the election, parties or related activity, including voting. The FEC asks if it should be possible to include a reference to voting. Nonpartisan get out the vote appeals could potentially be included in an issue advocacy ad.
• Prong 4 says the broadcast cannot comment on an officeholder's character or fitness for office. The FEC says "effective lobbying may require reference to an officeholder's position or record on a particular issue. . . . Thus, a discussion of an officeholder's position on a public policy issue or legislative record may be consistent with the content of a genuine issue advertisement, and may, therefore not automatically render a communication ineligible for the proposed safe harbor." (p. 24-25) The FEC asks for comments to clarify where the line on this question should be.

Overall, both alternatives put forth by the FEC include a general exemption and safe harbors for grassroots lobbying and business advertisements. The difference is that Alternative 1 would require that sponsors of non-electoral broadcasts file disclosure reports on their funding sources to the FEC. The FEC does not have jurisdiction over lobbying, and the federal Lobbying Disclosure Act, ethics disclosure requirements in most states and, for charities, the Internal Revenue Service, all require disclosure of lobbying information. This makes it difficult to see how the FEC could require donor disclosure for activities it has no authority to regulate. In supporting the First Amendment rights of nonprofit organizations to engage in advocacy and their valuable role in public policy, OMB Watch plans to submit comments reiterating that the FEC should not try to require the disclosure of grassroots lobbying costs. Grassroots advocacy communications are not about an election, and therefore they should not have to be reported to the FEC. We encourage nonprofits to submit comments before the Oct. 1 deadline.