Internet Communications, 18589-18614 [06-3190]

Agencies

• Federal Election Commission

[Federal Register Volume 71, Number 70 (Wednesday, April 12, 2006)]
[Rules and Regulations]
[Pages 18589-18614]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-3190]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
week.

========================================================================


Federal Register / Vol. 71, No. 70 / Wednesday, April 12, 2006 / 
Rules and Regulations

[[Page 18589]]



FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 110, and 114

[Notice 2006--8]


Internet Communications

AGENCY: Federal Election Commission.

ACTION: Final Rules and Transmittal to Congress.

-----------------------------------------------------------------------

SUMMARY: The Federal Election Commission is amending its rules to 
include paid advertisements on the Internet in the definition of 
``public communication.'' These final rules implement the recent 
decision of the U.S. District Court for the District of Columbia in 
Shays v. Federal Election Commission, which held that the previous 
definition of ``public communication'' impermissibly excluded all 
Internet communications. The revised definition of ``public 
communication'' includes paid Internet advertising placed on another 
person's website, but does not encompass any other form of Internet 
communication. The Commission is also re-promulgating without change 
its definition of ``generic campaign activity'' and amending the scope 
of its disclaimer regulations, both of which incorporate the revised 
definition of ``public communication.'' Additionally, the Commission is 
adding new exceptions to the definitions of ``contribution'' and 
``expenditure'' to exclude Internet activities and communications that 
qualify as individual activity or that qualify for the ``media 
exemption.'' These final rules are intended to ensure that political 
committees properly finance and disclose their Internet communications, 
without impeding individual citizens from using the Internet to speak 
freely regarding candidates and elections. Further information is 
provided in the Supplementary Information that follows.

DATES: Effective Date: May 12, 2006.

FOR FURTHER INFORMATION CONTACT: Mr. Brad C. Deutsch, Assistant General 
Counsel, Mr. Richard T. Ewell, Ms. Amy L. Rothstein, or Ms. Esa L. 
Sferra, Attorneys, 999 E Street, NW., Washington, DC 20463, (202) 694-
1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION:

Introduction

    The Commission is promulgating these final rules to provide 
guidance with respect to the use of the Internet in connection with 
Federal elections. The Commission commenced this rulemaking following a 
decision of the United States District Court for the District of 
Columbia in Shays v. Federal Election Commission, 337 F. Supp. 2d 28 
(D.D.C. 2004) (``Shays District''), aff'd, 414 F.3d 76 (D.C. Cir. 2005) 
(``Shays Appeal''), reh'g en banc denied (Oct. 21, 2005), which 
required the Commission to remove the former wholesale exclusion of 
Internet activity from its definitions of two terms: ``public 
communication'' and ``generic campaign activity.'' In examining issues 
relating to Internet communications, the Commission has also decided to 
address several of its other rules to remove potential restrictions on 
the ability of individuals and others to use the Internet as a low-cost 
means of civic engagement and political advocacy.
    These final rules follow the publication of a Notice of Proposed 
Rulemaking (``NPRM'') on Internet Communications, in which the 
Commission sought comments on several proposed revisions to its rules. 
See 70 FR 16967 (April 4, 2005). The Commission received more than 800 
comments in response to the NPRM, the vast majority of which urged 
limited, if any, regulation of Internet activities. Additionally, the 
Commission received a letter from the Internal Revenue Service 
indicating that ``the proposed rules do not pose a conflict with the 
Internal Revenue Code or the regulations thereunder.''
    After reviewing the written comments and testimony provided at a 
hearing on June 28 and 29, 2005,\1\ the Commission has decided to take 
the following six actions: (1) Revise its definition of ``public 
communication;'' (2) re-promulgate the definition of ``generic campaign 
activity'' without revision; (3) revise the disclaimer requirements; 
(4) add an exception for uncompensated individual Internet activities; 
(5) revise the ``media exemption;'' and (6) add a new provision 
regarding the use of corporate and labor organization computers and 
other equipment for Internet activities by certain individuals.
---------------------------------------------------------------------------

    \1\ The comments and a transcript of the hearing are available 
at https://www.fec.gov/law/law_rulemakings.shtml#Internet05.
---------------------------------------------------------------------------

    The Commission is aware of the heightened importance and public 
awareness of any change to its rules that could affect political 
activity and speech on the Internet. The Commission notes that the 
change to the definition of ``public communication'' in this rulemaking 
is a change to a definition that has a narrow impact on the law.\2\ 
This term defines the scope of covered activity for a limited number of 
groups who are either already subject to Commission regulation, or who 
are coordinating with candidates or political parties who are 
themselves currently subject to regulation. Congress did not use the 
term ``public communication'' to regulate the vast majority of the 
American public's activity on the Internet or elsewhere. Everyday 
activity by individuals, even when political in nature, will not be 
affected by the changes made in this rulemaking.
---------------------------------------------------------------------------

    \2\ The change affects only the following regulatory provisions: 
the restrictions on funding of Federal election activity by 
political party committees and State and local candidates (2 U.S.C. 
431(20)); the allocation of costs of certain communications by some 
political committees under 11 CFR 106.6(b); the determination that 
certain communications must be treated as contributions if 
coordinated with a Federal candidate or political party committee 
under 11 CFR 109.21 and 109.37; and the requirement to include 
disclaimer statements on certain communications pursuant to 11 CFR 
110.11.
---------------------------------------------------------------------------

    Through this rulemaking, the Commission recognizes the Internet as 
a unique and evolving mode of mass communication and political speech 
that is distinct from other media in a manner that warrants a 
restrained regulatory approach. The Internet's accessibility, low cost, 
and interactive features make it a popular choice for sending and 
receiving information. Unlike other forms of mass communication, the 
Internet has minimal barriers to entry, including its low cost and 
widespread accessibility. Whereas the general public can communicate 
through television or radio broadcasts and most other forms of mass 
communication only by paying

[[Page 18590]]

substantial advertising fees, the vast majority of the general public 
who choose to communicate through the Internet can afford to do so.
    When paid advertising on another person's website does occur on the 
Internet, the expense of that advertising sets it apart from other uses 
of the Internet, although even the cost of advertising on another 
entity's website will often be below the cost of advertising in some 
other media.
    These final rules therefore implement the regulatory requirements 
mandated by the Shays District decision by focusing exclusively on 
Internet advertising that is placed for a fee on another person's 
website. In addition, these rules add new exceptions to the definitions 
of ``contribution'' and ``expenditure'' to protect individual and media 
activity on the Internet.\3\
---------------------------------------------------------------------------

    \3\ The terms ``contribution'' and ``expenditure'' include 
gifts, subscriptions, purchases, payments, distributions, loans, 
advances or deposits of money, or anything of value made by any 
person for the purpose of influencing any election for Federal 
office. See 2 U.S.C. 431(8)(A)(i) and 431(9)(A); see also 11 CFR 
Part 100, Subparts B & D.
---------------------------------------------------------------------------

    As a whole, these final rules make plain that the vast majority of 
Internet communications are, and will remain, free from campaign 
finance regulation. To the greatest extent permitted by Congress and 
the Shays District decision, the Commission is clarifying and affirming 
that Internet activities by individuals and groups of individuals face 
almost no regulatory burdens under the Federal Election Campaign Act. 
The need to safeguard Constitutionally protected political speech 
allows no other approach.

Transmission of Final Rules to Congress

    Under the Administrative Procedure Act (``APA''), 5 U.S.C. 553(d), 
and the Congressional Review of Agency Rulemaking Act, 5 U.S.C. 
801(a)(1), agencies must submit final rules to the Speaker of the House 
of Representatives and the President of the Senate and publish them in 
the Federal Register at least 30 calendar days before they take effect. 
The final rules that follow were transmitted to Congress on March 29, 
2006.

Explanation and Justification

I. Unique Characteristics and Uses of the Internet

    The Internet has a number of unique characteristics that 
distinguish it from traditional forms of mass communication.\4\ Unlike 
television, radio, newspapers, magazines, or even billboards, ``the 
Internet can hardly be considered a `scarce' expressive commodity. It 
provides relatively unlimited, low-cost capacity for communication of 
all kinds.'' Reno v. ACLU, 521 U.S. 844, 870 (1997). In response to the 
NPRM, one commenter noted that a ``computer and an Internet connection 
can turn anyone into a publisher who can speak to a mass audience.'' 
For example, an individual with access to a computer and the Internet 
can create a free blog \5\ at sites such as www.blogger.com, 
www.blogeasy.com, spaces.msn.com, or www.typepad.com. Additionally, 
because an Internet communication is not limited in duration and is not 
subject to the same time and space limitations as television and radio 
programming, the Internet provides a means to communicate with a large 
and geographically widespread audience, often at very little cost.\6\ 
Now that many public spaces such as libraries, schools, and coffee 
shops provide Internet access without charge, individuals can create 
their own political commentary and actively engage in political debate, 
rather than just read the views of others. In the words of one 
commenter, the Internet's ``near infinite capacity, diversity, and low 
cost of publication and access'' has ``democratized the mass 
distribution of information, especially in the political context.'' The 
result is the most accessible marketplace of ideas in history.
---------------------------------------------------------------------------

    \4\ See Enrique Armijo, Public Airwaves, Private Mergers: 
Analyzing the FCC's Faulty Justification for the 2003 Media 
Ownership Rule Change, N.C. L. Rev. 1482, 1494 (May 2004) 
(discussing broadcast media and the Internet as ``imperfect 
substitutes''); see also Ryan Z. Watts, Independent Expenditures on 
the Internet: Federal Election Law and Political Speech on the World 
Wide Web, 8 CommLaw Conspectus 149, 160 (Winter 2000) (discussing 
Reno v. ACLU, 521 U.S. 844 (1997) and the Internet's differences 
from traditional media).
    \5\ The word ``blog'' derives from the term ``Web log'' and is 
defined as ``an online diary; a personal chronological log of 
thoughts published on a Web page.'' Webster's New Millennium 
Dictionary of English, available at https://www.dictionary.com (last 
visited 3/24/06). People who maintain blogs are known as 
``bloggers.''
    \6\ See Edward L. Carter, Outlaw Speech on the Internet: 
Examining the Link Between Unique Characteristics of Online Media 
and Criminal Libel Prosecutions, 21 Santa Clara Computer & High 
Tech. L.J. 289, 316-17 (January 2005) (``Internet is unlike 
traditional print or broadcast media in that messages can have a 
long shelf life--an Internet message can circulate via e-mail or 
remain posted somewhere even long after the message's creator has 
tried to retract it.'').
---------------------------------------------------------------------------

    It is common for businesses, groups, and even individuals, to make 
their own media--their website space--available to readers without 
charge. Whereas a newspaper can afford to devote only a limited amount 
of its print to others without charge, in the form of letters to the 
editor, and a television station can afford to provide only a very 
limited amount of air time to viewers for similar purposes, some 
bloggers can and often do publish every message submitted by readers. 
In fact, one commenter drew upon his own experience as a blogger in 
noting that much of the emerging Internet culture depends on 
collaboration for the construction of a blog or website, the generation 
of content (according to the blogger's testimony, most blogs do not 
have paid staff to perform such functions), and the sharing of 
information and online resources. The commenter stated that his website 
has more than 50,000 registered users contributing to its content, and 
he estimated that he writes only about 2,000 of the 200,000 words of 
content published on his website each day.
    A number of commenters also noted that the Internet differs from 
traditional forms of mass communication because individuals must 
generally be proactive in order to access information on a website, 
whereas individuals receive information from television or radio the 
instant the device is turned on, or passively view a billboard while 
driving or walking down a street. These comments echo the Supreme 
Court's observation that communications over the Internet are not as 
``invasive'' as communications made through traditional media. See 
Reno, 521 U.S. at 869. For example, a broadcast television viewer or 
radio listener who turns on his television or radio set is 
automatically subjected to the limited, available programming. In 
contrast, a website's information is seen only by those who actively 
take the steps necessary to find, visit, and view the website.
    During 2005, an estimated 204 million people in the United States 
used the Internet.\7\ In the first half of 2005, an estimated 67 
percent of the adult American population used the Internet.\8\ At the 
end of 2004, 87 percent of American teens (ages 12-17, representing the 
next generation of voters) were using the Internet,\9\ and on average, 
70 million American adults

[[Page 18591]]

logged onto the Internet on a daily basis.\10\
---------------------------------------------------------------------------

    \7\ See Internet World Stats available at https://
www.Internetworldstats.com/stats2.htm (last visited 3/24/06).
    \8\ See Pew Internet & American Life Project, How Women and Men 
use the Internet, p. I, (2005) available at https://
www.pewInternet.org/pdfs/PIP--Women--and--Men--online.pdf (last 
visited 3/24/06).
    \9\ See Pew Internet & American Life Project, Teens and 
Technology, p. I (2005) available at https://www.pewInternet.org/
pdfs/PIP--Teens--Tech--July2005web.pdf (last visited 3/24/06).
    \10\ See Pew Internet & American Life Project, Trends 2005, 
Chapter 4, Internet: The Mainstreaming of Online Life, p. 58 (2005) 
available at https://www.pewInternet.org/pdfs/Internet--Status--
2005.pdf (last visited 3/24/06).
---------------------------------------------------------------------------

    A growing segment of the American population uses the Internet as a 
supplement to, or as a replacement for, more traditional sources of 
information and entertainment, such as newspapers, magazines, 
television, and radio. By mid-2004, 92 million Americans reported 
obtaining news from the Internet.\11\
---------------------------------------------------------------------------

    \11\ See Pew Internet & American Life Project and the University 
of Michigan School of Information, The Internet and the Democratic 
Debate, p. 2 (October 27, 2004) available at https://
www.pewInternet.org/pdfs/PIP--Political--Info--Report.pdf (last 
visited 3/24/06).
---------------------------------------------------------------------------

    The 2004 election cycle also marked a dramatic shift in the scope 
and manner in which Americans used websites, blogs, listservs,\12\ and 
other Internet communications to obtain information on a wide range of 
campaign issues and candidates.\13\ The number of Americans using the 
Internet as a source of campaign news more than doubled between 2000 
and 2004, from 30 million to 63 million.\14\ An estimated 11 million 
people relied on politically oriented blogs as a primary source of 
information during the 2004 presidential campaign,\15\ and 18 percent 
of all Americans cited the Internet as their leading source of news 
about the 2004 presidential election.\16\
---------------------------------------------------------------------------

    \12\ A ``listserv'' is a software program that automatically 
sends electronic mail messages to multiple e-mail addresses on an 
electronic mail list. See, e.g., https://www.lsoft.com/products/
listserv.asp (last visited 3/24/06). The term ``listserv'' is 
commonly used, however, to denote the electronic mail list itself or 
the automated forwarding to all addresses on the mailing list of an 
e-mail sent only to the listserv's e-mail address.
    \13\ See Pew Internet & American Life Project, The Internet and 
Campaign 2004, available at https://www.pewInternet.org/pdfs/PIP--
2004--Campaign.pdf (last visited 3/24/06).
    \14\ See note 9, above, The Internet and Democratic Debate, p. 
2. During the same time period, the number of people reporting 
television as their primary source of campaign information declined. 
Id.
    \15\ See Jessica Mintz, When Bloggers Make News--As Their Count 
Increases, Web Diarists Are Asking: Just What Are the Rules? Wall 
St. J., Jan. 21, 2005 at B1.
    \16\ See note 10, above, The Mainstreaming of Online Life, p. 2.
---------------------------------------------------------------------------

    Individuals not only sought information about campaigns on the 
Internet, but also took advantage of the low cost of Internet 
communication as they took active roles in supporting policies and 
candidates. According to a number of commenters, common Internet 
activities have included: Posting commentary regarding Federal 
candidates and political parties on their own websites; submitting 
comments regarding Federal candidates and political parties on websites 
owned by other individuals; creating advertisements, videos, and other 
audiovisual tools for distribution on the Internet; fundraising; 
promoting or republishing candidate-authored materials; participating 
in online ``chats'' about campaigns; providing hyperlinks from their 
own websites to campaign websites and other websites; and using e-mail 
to organize grassroots political activities.
    A number of commenters suggested that the potential for a free 
exchange of information and opinions through the Internet promotes 
access to information about candidates, ballot measures, and 
legislation. More than half of the hundreds of commenters expressed 
concern that the same unique characteristics of the Internet that make 
it so widely accessible to individuals and small groups also makes it 
more likely that individuals and small groups whose web activities 
generally are not regulated by FECA might engage in activities that 
unintentionally trigger Federal regulation. Whereas the corporations 
and other organizations capable of paying for advertising in 
traditional forms of mass communication are also likely to possess the 
financial resources to obtain legal counsel and monitor Commission 
regulations, individuals and small groups generally do not have such 
resources. Nor do they have the resources, as one commenter cautioned, 
to respond to politically motivated complaints in the enforcement 
context. Several commenters warned that individuals might simply cease 
their Internet activities rather than attempt to comply with 
regulations they found overly burdensome and costly. Thus, some 
commenters asserted, it is essential that the Commission narrow the 
scope and impact of any regulation of Internet activity and establish 
bright-line regulations to delineate any restricted activity in order 
to avoid chilling political participation and speech on the Internet.

II. Congressional Action, Commission Action, and the Courts

    The Bipartisan Campaign Reform Act of 2002, Public Law 107-155, 116 
Stat. 81 (2002) (``BCRA''), amended the Federal Election Campaign Act 
of 1971, as amended (the ``Act''), 2 U.S.C. 431 et seq., in various 
respects. The Commission implemented these changes in the law through a 
series of rulemakings during 2002.
    A number of these changes hinged on the definition of ``public 
communication.'' First, Congress required State, district, and local 
political party committees and organizations, as well as State and 
local candidates, to use only Federal funds \17\ to pay for any 
``public communication'' that promotes, supports, attacks or opposes 
(``PASOs'') a clearly identified candidate for Federal office. See 2 
U.S.C. 431(20)(A)(iii) and 441i(b) and (f); see also 11 CFR 
100.24(b)(3) and (c)(1), 300.32(a)(1) and (2), and 300.71.\18\ Congress 
defined a ``public communication'' as ``a communication by means of any 
broadcast, cable, or satellite communication, newspaper, magazine, 
outdoor advertising facility, mass mailing, or telephone bank to the 
general public, or any other form of general public political 
advertising.'' 2 U.S.C. 431(22). When the Commission promulgated 
regulations to implement these BCRA provisions, it explicitly excluded 
all Internet communications from its definition of ``public 
communication'' and, therefore, none of the Commission's rules 
governing the funding of ``public communications'' applied to Internet 
communications. See 11 CFR 100.26; Final Rules on Prohibited and 
Excessive Contributions; Non-Federal Funds or Soft Money, 67 FR 49064 
(July 29, 2002) (``Soft Money Final Rules'').
---------------------------------------------------------------------------

    \17\ ``Federal funds'' are funds subject to the limitations, 
prohibitions, and reporting requirements of the Act. See 11 CFR 
300.2(g). ``Non-Federal funds'' are funds not subject to the 
limitations and prohibitions of the Act. See 11 CFR 300.2(k).
    \18\ There are four types of ``Federal election activity'': Type 
1--Voter registration activity during the period that begins on the 
date that is 120 days before a regularly scheduled Federal election 
is held and ends on the date of the election; Type 2--Voter 
identification, get-out-the-vote activity, or ``generic campaign 
activity'' conducted in connection with an election in which a 
candidate for Federal office appears on the ballot; Type 3--A 
``public communication'' that promotes, supports, attacks or opposes 
a clearly identified candidate for Federal office; and Type 4--
Services provided during any month by an employee of a State, 
district, or local committee of a political party who spends more 
than 25 percent of that individual's compensated time during that 
month on activities in connection with a Federal election. See 2 
U.S.C. 431(20) and 11 CFR 100.24.
---------------------------------------------------------------------------

    Second, Congress restricted the funds that State, district, and 
local political party committees may use for certain types of ``Federal 
election activity'' (``FEA''), including ``generic campaign activity.'' 
2 U.S.C. 431(20)(A)(ii) and 441i(b); 11 CFR 100.24(2)(ii) and 
300.33(a)(2).\19\ Congress defined

[[Page 18592]]

``generic campaign activity'' as ``campaign activity that promotes a 
political party and does not promote a [Federal] candidate or non-
Federal candidate.'' 2 U.S.C. 431(21). The Commission incorporated the 
term ``public communication,'' along with its exclusion of Internet 
communications, into the definition of ``generic campaign activity'' in 
its rules. See 11 CFR 100.25; Soft Money Final Rules.
---------------------------------------------------------------------------

    \19\ State, district, and local party committees and 
organizations may use an allocated mix of Federal funds and ``Levin 
funds'' to pay for ``generic campaign activity'' conducted in 
connection with an election in which a candidate for Federal office 
appears on the ballot (regardless of whether a candidate for State 
or local office also appears on the ballot), or the party committee 
or organization must pay for the communication entirely with Federal 
funds. See 2 U.S.C. 441i(b)(2)(A); 11 CFR 300.32(b)(1)(ii), 
300.32(c) and 300.33. ``Levin funds'' are a type of non-Federal 
funds created by BCRA that may be raised and spent by State, 
district, and local party committees and organizations to pay for 
the allocable portion of Types 1 and 2 Federal election activity. 
See 2 U.S.C. 441i(b)(2)(A) and (B); 11 CFR 300.2(i), 300.32(b). 
These funds may include donations from some sources ordinarily 
prohibited by Federal law (e.g., corporations, labor organizations 
and Federal contractors) to the extent permitted by State law, but 
are limited to $10,000 per calendar year from any source or to the 
limits set by State law--whichever limit is lower. See 11 CFR 
300.31.
---------------------------------------------------------------------------

    Third, Congress expressly repealed the Commission's then-existing 
rules on ``coordinated general public political communication'' at 
former 11 CFR 100.23 and instructed the Commission to promulgate new 
regulations on ``coordinated communications paid for by persons other 
than candidates, authorized committees of candidates, and party 
committees.'' See Public Law 107-155, sections 214(b) and (c) (March 
27, 2002); Final Rules on Coordinated and Independent Expenditures, 68 
FR 421 (Jan. 3, 2003) (``Coordinated Communication Final Rules''). When 
the Commission subsequently promulgated regulations implementing this 
provision, it required that a communication be a ``public 
communication'' as defined in 11 CFR 100.26 to qualify as either a 
``coordinated communication'' or a ``party coordinated communication.'' 
11 CFR 109.21(c) and 109.37(a)(2); \20\ see also Coordinated 
Communication Final Rules at 428-431. Thus, Internet communications 
were excluded from the regulations pertaining to ``coordinated 
communications'' and ``party coordinated communications.''
---------------------------------------------------------------------------

    \20\ An ``electioneering communication'' may also be a 
coordinated communication. See 11 CFR 109.21(c)(1). However, because 
``electioneering communications'' are limited to broadcast, cable, 
or satellite communications, they constitute a subset of ``public 
communications.'' See 2 U.S.C. 434(f)(3); 11 CFR 100.29 (defining an 
``electioneering communication'' as a ``broadcast, cable, or 
satellite communication'' that refers to a clearly identified 
candidate for Federal office, is publicly distributed within 60 days 
before a general election for the office sought by the candidate, or 
within 30 days before the primary election for that office, and is 
targeted to the relevant electorate).
---------------------------------------------------------------------------

    Fourth, Congress revised the ``disclaimer'' requirements in 2 
U.S.C. 441d by requiring a disclaimer whenever a disbursement for 
``general public political advertising'' is either made by any 
political committee, or expressly advocates the election or defeat of a 
clearly identified candidate, or solicits any contribution. The 
Commission relied primarily on the definition of ``public 
communication'' in 11 CFR 100.26 when it implemented the new disclaimer 
requirements, although it also required disclaimers for political 
committee websites available to the general public and certain 
unsolicited electronic mailings of more than 500 substantially similar 
communications. See 11 CFR 110.11(a); Final Rules on Disclaimers, 
Fraudulent Solicitation, Civil Penalties, and Personal Use of Campaign 
Funds, 67 FR 76962 (Dec. 13, 2002) (``Disclaimer Final Rules''). As a 
result, most Internet content was excluded from the disclaimer 
requirements. See id.
    The Commission also incorporated the term ``public communication'' 
into two other regulations at 11 CFR 300.2(b)(4) and 11 CFR 106.6, and 
thereby excluded Internet content from those requirements as well. The 
first of these regulations defines an ``agent'' of a candidate for 
State or local office as a person who has actual authority by that 
candidate to ``spend funds for a public communication.'' See 11 CFR 
300.2(b)(4); Soft Money Final Rules. The second of these rules 
incorporates the term ``public communication'' into the allocation 
rules governing certain spending by a separate segregated fund 
(``SSF'') or a nonconnected committee. See Final Rules on Political 
Committee Status, Definition of Contribution, and Allocation for 
Separate Segregated Funds and Nonconnected Committees, 69 FR 68056 
(Nov. 23, 2004) (``Political Committee Status Final Rules''). Whenever 
an SSF or nonconnected committee pays for a ``public communication'' 
that (1) refers to a political party, but does not refer to any clearly 
identified Federal or non-Federal candidate, or (2) refers to one or 
more clearly identified Federal candidates, the SSF or nonconnected 
committee must pay for the communication entirely with Federal funds or 
by allocating such expenses between its Federal and non-Federal 
accounts in accordance with 11 CFR 106.6(b) and (f). See id.
    The Shays District decision invalidated the Commission's definition 
of ``public communication'' at 11 CFR 100.26, Shays District at 64-65, 
based on the Commission's complete exclusion of Internet communications 
from this definition. After noting that Congress used the phrase ``or 
any other form of general public political advertising'' as a catch-all 
in BCRA's definition of ``public communication,'' the Shays District 
court concluded that ``[w]hile all Internet communications do not fall 
within [the scope of ``any other form of general public political 
advertising'], some clearly do.'' Shays District at 67.\21\ The Shays 
District court left it to the Commission to determine ``what 
constitutes `general public political advertising' in the world of the 
Internet,'' and thus should be treated as a ``public communication.'' 
Id. at 70.
---------------------------------------------------------------------------

    \21\ The Shays District court analyzed the Commission's rules 
under a two-step test set out by the Supreme Court in Chevron, 
U.S.A., Inc. v. National Res. Def. Council, 467 U.S. 837 (1984) 
(``Chevron''). The first step of the Chevron analysis examines 
whether Congress has directly spoken to the precise questions at 
issue. The second step considers whether the agency's resolution of 
an issue not addressed in the statute is based on a permissible 
construction of the statute. In reviewing the definition of ``public 
communication,'' the Shays District court found that the rule's 
exclusion of all Internet communications did not comport with the 
plain meaning of the statutory requirement that all forms of general 
public political advertising be considered forms of ``public 
communication,'' and therefore did not satisfy step one of the 
Chevron test. Shays District at 69-70. The Commission did not appeal 
the portion of the Shays District decision regarding the definition 
of a ``public communication.'' The Shays District decision also 
stated that, in the alternative, the regulatory definition of 
``public communication'' as applied to the ``content prong'' of the 
coordinated communication regulations in 11 CFR 109.21(c) was 
impermissibly narrowed by the coordination regulation, thereby 
undermining the purposes of the Act and thus providing an 
independent basis for invalidation under step two of the Chevron 
test. See Shays District at 70-71.
---------------------------------------------------------------------------

    The Shays District court also found the Commission's rule defining 
the term ``generic campaign activity'' to be similarly underinclusive 
because it incorporated the regulatory definition of ``public 
communication,'' which excluded all forms of Internet communications. 
Id. at 112. Although the Shays District court found that the 2002 
Notice of Proposed Rulemaking for ``generic campaign activity'' failed 
to satisfy the requirements of the APA because it did not provide 
adequate notice to the public that the Commission might define 
``generic campaign activity'' as a ``public communication'' in the 
final rules, the Shays District court otherwise approved the definition 
of ``generic campaign activity'' as limited to ``public 
communications.'' Id. at 112, citing the Soft Money Final Rules at 
35675.
    The Shays District court remanded the rules defining ``public 
communication,'' ``generic campaign activity,'' and ``coordinated 
communication'' to the Commission for further action consistent with 
its opinion. Shays District at 131. The Commission subsequently issued 
the

[[Page 18593]]

NPRM addressing the definition of ``public communication'' in each of 
the remanded regulations. In the NPRM, the Commission also noted that 
the term ``public communication'' is incorporated into two other 
sections of its regulations, 11 CFR 106.6(b) and (f) (allocation of 
expenses between Federal and non-Federal activities by SSFs and 
nonconnected committees), and 11 CFR 300.2(b)(4) (definition of 
``agent'' for non-Federal candidates). The Commission also proposed new 
exceptions from the definitions of ``contribution'' and ``expenditure'' 
to exempt volunteer and independent activity on the Internet, and 
proposed an additional clarification that certain Internet activities 
would qualify for the media exemption. In addition, the Commission 
proposed revisions to its rules in 11 CFR 114.9 regarding employee use 
of corporate and labor organization computers, software, and other 
Internet equipment and services for individual Internet activities.

III. 11 CFR 100.26--Definition of ``Public Communication''

A. Proposed 11 CFR 100.26 Published in the NPRM

    The Shays District decision required the Commission to identify 
those Internet communications that qualify as ``general public 
political advertising,'' and thus would be encompassed within the 
definition of ``public communication'' in 2 U.S.C. 431(22). While 
drafting a proposed rule, the Commission recognized the important 
purpose of BCRA in preventing actual and apparent corruption and the 
circumvention of the Act as well as the plain meaning of ``general 
public political advertising,'' and the significant public policy 
considerations that encourage the promotion of the Internet as a unique 
forum for free or low-cost speech and open information exchange. The 
Commission was also mindful that there is no record that Internet 
activities present any significant danger of corruption or the 
appearance of corruption, nor has the Commission seen evidence that its 
2002 definition of ``public communication'' has led to circumvention of 
the law or fostered corruption or the appearance thereof. Therefore, 
the Commission proposed to treat paid Internet advertising on another 
person's website as a ``public communication,'' but otherwise sought to 
exclude all Internet communications from the definition of ``public 
communication.'' \22\
---------------------------------------------------------------------------

    \22\ The term ``person'' is defined to include ``an individual, 
partnership, committee, association, corporation, labor 
organization, or any other organization or group of persons, but 
such term does not include the Federal Government or any authority 
of the Federal Government.'' 2 U.S.C. 431(11).
---------------------------------------------------------------------------

B. Comments on the Proposed Rule

    Most commenters who addressed the Shays District court's 
requirement that the Commission include some forms of Internet 
communications as ``general public political advertising'' expressed 
general support for the rule as proposed in the NPRM.\23\ These 
commenters praised the Commission's proposed separate treatment of 
communications on a person's own website as distinct from 
communications placed on another person's website, and nearly all 
commenters agreed that paid advertisements placed on another person's 
website are ``general public political advertising.'' One commenter 
noted that Congress had defined ``public communication'' in 2 U.S.C. 
431(22) by listing several examples of media such as television, radio, 
billboards and newspapers. That commenter observed that communications 
through the listed forms of media are typically placed for a fee. The 
commenter concluded that it would be appropriate from a statutory 
perspective for the Commission to capture within the definition of 
``public communication'' only those Internet communications placed for 
a fee on another person's website.
---------------------------------------------------------------------------

    \23\ Several commenters argued that the Commission should 
preserve the status quo and continue to exclude all Internet 
communications from the definition of ``public communication.'' The 
Commission does not believe that such an approach would comport with 
the Shays District decision.
---------------------------------------------------------------------------

    Another commenter generally supported the proposed rule, but 
recommended that the definition also encompass advertisements provided 
in exchange for something of value other than money (e.g., an 
advertising trade or link exchange). Two other commenters, however, 
cautioned against including any Internet communications that do not 
involve the exchange of money. In light of the unique nature and 
variety of Internet communications, these commenters explained, the 
value of these communications would be difficult to ascertain under the 
Commission's traditional tests for normal and usual charge or fair 
market value.\24\
---------------------------------------------------------------------------

    \24\ The ``usual and normal charge for goods'' is defined as 
``the price of those goods in the market from which they ordinarily 
would have been purchased at the time of the [contribution or 
expenditure],'' and the ``usual and normal charge for services'' is 
defined as ``the hourly or piecework charge for the services at a 
commercially reasonable rate prevailing at the time the services 
were rendered.'' 11 CFR 100.57(d)(2) and 100.111(e)(2). See, e.g., 
Advisory Opinion 2006-01 (Pac for a Change) (discounted rate 
provided by publisher to other large-quantity purchasers is the 
normal and usual charge that candidate's committee is required to 
pay to purchase large quantities of the candidate's book).
---------------------------------------------------------------------------

    A few commenters expressed concern that the proposed rule would 
allow corporations and labor organizations to make unregulated in-kind 
contributions to Federal candidates through coordinated communications 
on the Internet, although such coordinated communications would be 
regulated or prohibited if done through other media. One group of 
commenters listed activities of this nature that they believed would be 
permitted under the proposed definition of ``public communication'' in 
11 CFR 100.26, including: (1) An individual, political committee, or 
corporation pays to place banner advertisements \25\ on another 
person's website for a fee; (2) a corporation or labor organization 
pays for a pop-up advertisement that will appear over another person's 
website; \26\ (3) an individual pays to hire a video production company 
to produce a video that contains a message written by a candidate for 
Federal office, purchases an e-mail list, and sends the video to all 
the addresses on the purchased list; and (4) a State party committee 
pays to produce a video that refers solely to a candidate for Federal 
office and distributes the video only through its own website. Each of 
these activities is addressed below.
---------------------------------------------------------------------------

    \25\ ``Banner advertisements'' are advertisements on a Web page 
that convey messages in text, animated graphics, and sound. They 
traditionally appear in rectangular shape, but may take any shape. 
Typically, banner advertisements are linked to the advertiser's 
website, which enables a viewer to ``click through'' the 
advertisement to view the advertiser's website for further 
information on the product or service advertised. See https://
www.netlingo.com/lookup.cfm?term=ad+banner (last visited 3/24/06).
    \26\ ``Pop-up'' advertisements usually appear in a separate 
browser window from the one being viewed. The advertisements are 
superimposed over the window being viewed, and require the viewer to 
take some action, such as closing the window in which the pop-up 
advertisement appears, to continue viewing the underlying browser 
window. See https://www.netlingo.com/lookup.cfm?term=pop%2Dup%20ad 
(last visited 3/24/06).
---------------------------------------------------------------------------

C. Revised Rule: Internet Communications Placed on Another Person's 
Website for a Fee Are ``General Public Political Advertising''

    The Commission concludes that Internet communications placed on 
another person's website for a fee are ``general public political 
advertising,'' and are thus ``public communications'' as defined in 11 
CFR 100.26. Under this rule, when someone such as an individual, 
political committee, labor organization or corporation pays a fee to

[[Page 18594]]

place a banner, video, or pop-up advertisement on another person's 
website, the person paying makes a ``public communication.'' 
Accordingly, the final rule is largely the same as the proposed rule. 
While no other form of Internet communication is included in the 
definition of ``public communication,'' the placement of advertising on 
another person's website for a fee includes all potential forms of 
advertising, such as banner advertisements, streaming video, pop-up 
advertisements,\27\ and directed search results.\28\ The rule thus 
resolves concerns about the first two activities described in the 
previous paragraph.
---------------------------------------------------------------------------

    \27\ Although a pop-up advertisement may not technically be part 
of the underlying website or account, the Commission determines that 
it is ``placed on'' a website such that it qualifies as a ``public 
communication'' when a fee is paid for the pop-up.
    \28\ For example, companies such as Google and Yahoo! permit an 
advertiser to pay a fee to have its website appear as a ``sponsored 
link,'' or otherwise featured, when specific words are typed into 
the website's search engine. See https://www.google.com/intl/en/
webmasters/1.html (last visited 3/24/06) and https://
searchmarketing.yahoo.com/srch/index.php (last visited 3/24/06). If 
a fee is paid for such a service, then the resulting display of the 
product, hyperlink, or other message constitutes a form of ``general 
public political advertising.'' However, when the search results are 
displayed as a result of the normal function of a search engine, and 
not based on any payment for the display of a result, the search 
results are not forms of ``general public political advertising.'' 
In addition, where a search engine returns a website hyperlink in 
its normal course, and features the same hyperlink separately as the 
result of a paid sponsorship arrangement, the latter is a ``public 
communication'' while the former is not.
---------------------------------------------------------------------------

    The revised definition of ``public communication'' comports with 
the Shays District decision by removing the wholesale exclusion of all 
Internet communications from the definition of ``public 
communication.'' At the same time, the rule is carefully tailored to 
avoid infringing on the free and low-cost uses of the Internet that 
enable individuals and groups to engage in political discussion and 
advocacy on equal footing with corporations and labor organizations 
(through their SSFs) and other political committees, without the need 
to raise large amounts of funds.
    The forms of mass communication enumerated in the definition of 
``public communication'' in 2 U.S.C. 431(22), including television, 
radio, and newspapers, each lends itself to distribution of content 
through an entity ordinarily owned or controlled by another person. 
Thus, for an individual to communicate with the public using any of the 
forms of media listed by Congress, he or she must ordinarily pay an 
intermediary (generally a facility owner) for access to the public 
through that form of media each time he or she wishes to make a 
communication. This is also true for mass mailings and telephone banks, 
which are other forms of ``public communication'' under 2 U.S.C. 
431(22). A communication to the general public on one's own website, by 
contrast, does not normally involve the payment of a fee to an 
intermediary for each communication.
    The cost of placing a particular piece of political commentary on 
the Web is generally insignificant. The cost of such activity is often 
only the time and energy that is devoted by an individual to share his 
or her views and opinions with the rest of the Internet community. In 
this respect, a communication through one's own website is analogous to 
a communication made from a soapbox in a public square. There is no 
evidence in the legislative history of BCRA of a Congressional intent 
to regulate individual speech simply because it takes place through 
online media.
    Communications placed for a fee on another person's website, 
however, are analogous to the forms of ``public communication'' 
enumerated by Congress in 2 U.S.C. 431(23), particularly in light of 
the growing popularity of Internet advertising. As the public has 
turned increasingly to the Internet for information and entertainment, 
advertisers have embraced the Internet and its new marketing 
opportunities. Internet advertising revenue increased by 33.9 percent 
between the third quarter of 2004 and the third quarter of 2005 and 
reached $3.1 billion for the third quarter of 2005.\29\ The cost of 
advertising on the Internet distinguishes it from other forms of 
Internet communication, such as blogging or publishing one's own 
website, which are generally performed for free or at low cost.
---------------------------------------------------------------------------

    \29\ See Interactive Advertising Bureau, ``Internet Advertising 
Revenues Surpass $3 Billion for Q3; Run Rate for Full Year 2005 on 
Pace to Exceed $12 Billion'' (Nov. 21, 2005), available at https://
www.iab.net/news/pr_2005_11_21.asp (last visited 3/24/06).
---------------------------------------------------------------------------

    Moreover, because Congress did not include the Internet in the list 
of media enumerated in the statutory definition of ``public 
communication,'' an Internet communication can qualify as a ``public 
communication'' only if it is a form of advertising and therefore falls 
within the catch-all category of ``general public political 
advertising.'' See 2 U.S.C. 431(22). By definition, the word 
``advertising'' connotes a communication for which a payment is 
required, particularly in the context of campaign messages. See, e.g., 
The American Heritage[reg] Dictionary of the English 
Language (4th ed. 2000) (``The activity of attracting public attention 
to a product or business, as by paid announcements in the print, 
broadcast or electronic media.''); The Random House Webster's 
Unabridged Dictionary (2d ed. 2005) (``1. The act or practice of 
calling public attention to one's product, service, need, etc., esp. by 
paid announcements in newspapers and magazines, over radio or 
television, on billboards, etc.; * * * 2. paid announcements; 
advertisements.''); J.I. Richards and C. M. Curran, Oracles on 
``Advertising'': Searching for a Definition, 31 Journal of Advertising 
at 3 (June 2002) (An extensive survey of advertising and marketing 
textbooks revealed ``certain recurring elements: (1) Paid, (2) 
nonpersonal, (3) identified sponsor, (4) mass media, and (5) persuade 
or influence.'')
    The Commission notes that this definition of ``public 
communication'' encompasses the types of advertising that some 
commenters believed should be covered, such as payments by anyone on 
behalf of a candidate or political committee for advertising on another 
person's website. As discussed below, this rule should be read together 
with other existing regulations regarding coordinated and independent 
expenditures and communications by corporations, labor organizations, 
and political committees.
    On the Internet, where individuals can build blogs and other 
websites for free, an individual can communicate with the general 
public at little or no cost. However, this is not true in the case of 
paid advertising on another person's website. For example, one of the 
commenters operates a website and sells advertising space for between 
$1,300 and $5,000 per week.\30\ Another commenter stated that the 
``minimum to run a banner ad campaign on most newspaper websites and 
portals is roughly $5,000.'' The Chicago Tribune, for example, charges 
$5,000 per week for a ``header ad'' on www.chicagotribune.com, and 
$20,000 per week for a ``homepage cube.'' See 
www.tribuneinteractive.com/chicago/mediakit/rates.htm (last visited 3/
24/06). Although paying for an advertisement on Chicagotribune.com may 
be less expensive than paying to place the same advertisement in the 
Chicago Tribune newspaper, both still require substantial funding. 
Furthermore, in both cases the advertiser is paying for access to an 
established audience using a forum controlled by another person, rather

[[Page 18595]]

than using a forum that he or she controls to establish his or her own 
audience.
---------------------------------------------------------------------------

    \30\ See https://www.dailykos.com/special/advertising (last 
visited 3/24/06).
---------------------------------------------------------------------------

    Three commenters requested a clarification regarding the proposed 
rule's exclusion of all Internet ``communications'' with the exception 
of certain paid ``announcements,'' and asked whether the Commission 
intended to attach any significance to the use of ``announcements'' 
instead of ``communications'' in the exception. The Commission did not 
intend any distinction through the use of different terms. To avoid 
confusion, the Commission has substituted ``communication'' in place of 
``announcement'' in the final rule.
    One of the commenters suggested adding a content requirement to the 
Commission's definition of ``public communication'' by substituting the 
term ``express advocacy'' \31\ for ``announcement'' and 
``communication.'' The Commission is not limiting the definition of 
``public communication'' by requiring any particular content, such as 
``express advocacy.'' There is no content requirement in the statutory 
definition of ``public communication,'' and there is no other basis for 
providing an additional content standard in the definition itself, 
whether the communications are made through the Internet or another 
medium. See 2 U.S.C. 431(22). The content of the communication is 
addressed separately, such as the requirement that a State, district, 
or local party committee use only Federal funds to pay for ``public 
communications'' that PASO a Federal candidate. See, e.g., 2 U.S.C. 
431(20); 11 CFR 100.24(b)(3) and (c)(1), 300.32(a)(1) and (2), and 
300.71. Thus, limiting the definition of ``public communication'' to 
only those communications containing ``express advocacy'' would be 
inconsistent with the Act's recognition in section 431(20) that some 
``public communications'' contain PASO messages, but not express 
advocacy.
---------------------------------------------------------------------------

    \31\ The term ``expressly advocating'' is defined in 11 CFR 
100.22 to include phrases such as ``vote for the President, re-elect 
your Congressman,'' and other slogans and words ``which in context 
can have no other reasonable meaning than to urge the election or 
defeat of one or more clearly identified candidate(s),'' or that, 
``when taken as a whole and with limited reference to external 
events such as the proximity to the election, could only be 
interpreted by a reasonable person as containing advocacy of the 
election or defeat of one or more clearly identified candidates.''
---------------------------------------------------------------------------

    A different commenter suggested substituting ``advertising'' in 
place of ``communication.'' The Commission is not adopting this 
suggestion because it is circular and could inject ambiguity into the 
definition of ``public communication.'' The result of the commenter's 
proposed change would be that ``Internet advertising placed for a fee'' 
would be a form of ``general public political advertising.'' That 
approach would appear to indicate that there are forms of advertising 
on the Internet other than paid advertising, which is contrary to the 
Commission's view and to the basis of the revised definition of 
``public communication,'' which rests on the definition of 
``advertising'' as a paid communication.

D. No Threshold Payment Amount for ``General Public Political 
Advertising''

    Several commenters argued that low-cost ``pay-per-click'' ads are 
too difficult to value because the cost of the advertisement is often 
variable, measured after the fact, and too low to warrant regulation as 
a ``public communication.'' For example, one commenter pointed to 
advertising opportunities available for $10-$25 per week through 
BlogAds.com. Commenters urged the Commission to revise the definition 
of ``public communication'' to capture only paid Internet ads that cost 
more than a certain threshold dollar amount. One of these commenters 
recommended that the Commission seek additional comment to determine 
the appropriate threshold amount and to index that resulting amount for 
inflation or re-examine the amount on a regular basis.
    The Commission is not establishing a minimum threshold amount in 
the final rule. There is no stated threshold payment amount in the 
statutory definition of ``public communication,'' and it is not clear 
on what statutory basis the Commission could establish one. Nor was the 
Commission able to establish a record that would justify a particular 
threshold. Congress could have chosen, but did not, to establish a 
specific threshold cost below which an advertisement would not be a 
``public communication.'' Thus, even late-night advertisements on small 
radio stations, low-cost classified ads in small circulation 
newspapers, and low-cost billboards in relatively remote areas are 
forms of ``public communication'' under 2 U.S.C. 431(13). Accordingly, 
all Internet communications placed for a fee on another person's Web 
site qualify as ``public communications.''
    Nevertheless, as a matter of enforcement policy, the Commission may 
exercise prosecutorial discretion regarding ``public communications'' 
on the Internet that involve insubstantial advertising charges. The 
amount claimed to have been spent in violation of law is always a 
factor in the Commission's enforcement decisions, and here, the 
Commission will be additionally mindful of the importance of minimizing 
any potential regulatory burden on the use of the Internet.

E. Advertiser, Not Web Site Operator, Makes the ``Public 
Communication''

    One commenter requested that the Commission clarify that the person 
who makes a ``public communication'' is the person seeking to place an 
Internet advertisement on another person's Web site, not the person 
controlling the Web site on which the advertisement appears. The 
Commission agrees that this is the intended operation of the rule and 
notes that the regulations that incorporate the term ``public 
communication'' clearly regulate the person paying for the ``public 
communication.'' See 11 CFR 100.24(b)(3) and (c)(1), 106.6, 109.21, 
109.37, 110.11, 300.2, 300.32(a)(1) and (2), and 300.71. For example, 
if a political party committee pays an Internet advertising company to 
place a pop-up advertisement on a certain Web site, or to place the 
pop-up advertisement in a manner that it will be triggered based on 
some other action of a computer user, the political party committee--
not the advertising company or the Web site owner--would be subject to 
the applicable restrictions on ``public communications.'' The 
Commission also notes that, as with other media included in the 
definition of ``public communication,'' the obligation to ensure that 
permissible sources are used rests with the entity whose funding is 
restricted by FECA, and not the Web provider.

F. Bloggers Not Addressed Separately

    In the NPRM, the Commission noted that its proposed regulations 
were unlikely to cover blogging activities. Nevertheless, the 
Commission asked whether it should revise the proposed rule to 
explicitly exclude all ``blogs'' from the definition of ``public 
communication.'' Each of the bloggers who testified at the hearing, and 
the majority of commenters who addressed this issue, warned against 
crafting a regulation tied to specific forms of Internet communication 
like blogging. One commenter noted that while at present blogs might be 
readily distinguished from other Web sites based on particular software 
used to generate the blog, that software is likely to change. Moreover, 
this commenter noted that other forms of communications, such as peer-
to-peer

[[Page 18596]]

``podcasting,'' \32\ may soon replace blogs as the ubiquitous format 
for low-cost Internet discussion and debate. Another commenter 
cautioned that providing special protection for bloggers might 
disadvantage others engaged in different yet analogous forms of 
Internet communication.
---------------------------------------------------------------------------

    \32\ ``Podcasting'' is a form of file distribution that is 
currently used primarily to distribute audio files, like a radio 
program, over the Internet in a format that can be received and 
played through an Apple iPod or similar device. See https://
www.ipodder.org/whatIsPodcasting (last visited 3/24/06).
---------------------------------------------------------------------------

    In light of the evolving nature of Internet communications, the 
Commission is not explicitly excluding from the definition of ``public 
communication'' any particular software or format used in Internet 
communications. The final rules already exclude ordinary blogging 
activity from the definition of ``public communication'' because blog 
messages are not placed for a fee on another person's Web site. Thus, 
an explicit exclusion focused on ``blogging'' is not only unnecessary 
but also potentially confusing to the extent that it implies that other 
forms of Internet communication, such as ``podcasting'' or e-mailing, 
might be regulated absent an explicit exclusion for each different form 
of Internet communication.

G. Paid Advertising on a Web Site Is a Form of ``General Public 
Political Advertising'' Even Where the Web Site Is Only Available to 
the Restricted Class of a Corporation or Labor Organization, or the 
Members of a Membership Organization

    The revision to the definition of ``public communication'' does not 
affect the regulations governing corporate or labor organization 
communications within and outside of its restricted class,\33\ or with 
the ability of a membership organization to communicate with its 
members on any subject.\34\ The Commission sought comment, however, on 
the appropriate treatment of advertisements placed for a fee by a 
third-party advertiser on a corporation's or labor organization's Web 
site that is solely available to its restricted class, or on a 
membership organization's Web site available only to its members. 
Specifically, the Commission asked whether such advertisements should 
be excluded from the definition of ``public communication.'' NPRM at 
16971. For example, if a political party committee pays to place an 
advertisement on a labor organization's password-protected Web site 
that is available only to that labor organization's restricted class, 
should that advertisement be considered a ``public communication''?
---------------------------------------------------------------------------

    \33\ The ``restricted class'' of a corporation is its 
stockholders and executive or administrative personnel, and their 
families, and the executive and administrative personnel of its 
subsidiaries, branches, divisions, and departments and their 
families. 11 CFR 114.1(j); see also 11 CFR 114.1(c). The 
``restricted class'' of a labor organization is its members and 
executive or administrative personnel, and their families. Id.
    \34\ Under the Act and Commission regulations, corporations and 
labor organizations may communicate with members of their restricted 
class on ``any subject.'' See 2 U.S.C. 431(9)(B)(iii) and 
441b(b)(2)(A); 11 CFR 100.134(a) and 114.3(a); see also Advisory 
Opinion 1997-16 (Oregon Natural Resources Council Action). 
Membership organizations may similarly communicate with their 
members. Id. Corporations, labor organizations, and membership 
organizations are generally prohibited, however, from making 
communications to the general public in connection with a Federal 
election, but they may publicly endorse Federal candidates on their 
Web sites in the normal course of releasing a press release so long 
as the press release is distributed in the normal manner and the 
organizations make efforts to allow only de minimis exposure of 
their Web sites beyond their restricted classes. See 11 CFR 
114.4(c)(6) and Advisory Opinion 1997-16. Thus, corporations, labor 
organizations, and membership organizations may expressly advocate 
the election or defeat of a clearly identified Federal candidate on 
the corporate or labor organization Web sites that are solely 
available to their respective restricted class. See discussion of 
revisions to 11 CFR 100.132 in section IX, below, and 11 CFR 
114.5(g); see also Advisory Opinions 2000-07 (Alcatel USA, Inc.) 
(corporation permitt