1	Federal Regulations & Your Campaign
2	FEDERAL REGULATIONS AND YOUR CAMPAIGN Presented by: Gregg P. Skall Lawrence H. Norton James A. Kahl
3	AGENDA Jim Kahl Basics Contributions Larry Norton Ads and other communications Activities of others Gregg Skall Rules for TV and Radio Ads Questions
4	THE LAWS Federal Election Campaign Act of 1971, as amended (“FECA”) Communications Act of 1934, as amended Bipartisan Campaign Reform Act of 2002 McCain – Feingold (or “BCRA”)
5	OBJECTIVES OF MCCAIN- FEINGOLD Curb Soft Money Raising National Parties Federal Officeholders Federal Candidates No Sham Issue Ads Remedy: Electioneering Communications
6	CONTRIBUTIONS
7	WHAT IS A CONTRIBUTION? Anything of value Given for the purpose of influencing a Federal election
8	CONTRIBUTIONS INCLUDE Gifts of money In-kind contributions Loans Exception for bank loans Guarantees Extensions of Credit
9	CONTRIBUTION LIMITS
10	PROHIBITED SOURCES FEDERAL ELECTIONS Corporations & Unions PAC Contributions Allowed Federal Government Contractors Partnerships Individuals under contract Sole Proprietors
11	PROHIBITED SOURCES ANY ELECTION National Banks Federally Chartered Corporations Foreign Nationals Green card holders excepted
12	WHO CAN VIOLATE THE LIMITATIONS AND PROHIBITIONS? Persons may not make prohibited or excessive contributions Campaigns may not knowingly accept prohibited or excessive contributions
13	LIABILITY Civil Liability – FEC Enforcement Up to 200% of amount involved 300% to 1000% of amount involved for conduit schemes Criminal Liability -- DOJ $2 to $25K: Fine &/or Up to 1 yr $25K and Up: Fine &/or Up to 5 yrs
14	WHO GAVE ME THAT CONTRIBUTION?
15	CONDUITS & BUNDLING “Bundling” not defined in FECA or FEC regulations If person collects checks: Report to FEC & recipient Contributor, amount, date & recipient Forward check within 10 days
16	FEC CONDUIT REPORTING EXCEPTIONS Employee or full time volunteer Significant position within campaign and authorized to raise money Affiliated committee Retained commercial fundraising firm
17	PROPOSED LEGISLATION S.1 AND H.R. 2317 LDA Amendment: Lobbyists only Collecting & arranging covered Reporting required if 2+ checks bundled and: $5000+ per quarter (House version) $200+ per year (Senate version) House bill: Info sent to candidate first; candidate can correct info
18	FEDERAL CANDIDATES SOLICITING FOR OTHERS
19	BCRA RESTRICTIONS Federal candidates and officeholders can only solicit hard money in connection with: Federal Elections State and Local Elections Restriction also applies to: Agents EFMC’d entities
20	BCRA EXCEPTIONS State or local candidate 501(c) organizations State party fundraisers Speak without limitation Regs being challenged But: soliciting for State and local candidates Hard money only
21	COST SHARING FOR POLITICAL ADS
22	BACKGROUND FEC allows costs to be allocated in some circumstances. Can allocate cost of ads between clearly ID’d candidates. Space/time split. Phone bank cost – can be allocated between party and candidate for hybrid communications (2003) Mass mailings - hybrid allocation allowed between party and candidate (2006)
23	BUSH-CHENEY 04
24	BUSH-CHENEY 04
25	BUSH-CHENEY 04
26	BUSH-CHENEY 04 Split the cost of $84 million of hybrid ads Audit: FEC Split 3-3 No violation No repayment obligation $42 million more spent on campaign ads Kerry-Edwards audit next
27	HYBRID AD RULEMAKING Should cost sharing be allowed between party committees and candidates? Published May 10, 2007 Comments due June 11, 2007
28	STRUCTURE
29	ROLE OF THE TREASURER Register the committee Deposit all receipts Authorize all expenditures Keep all records Sign and file all reports and statements Responsible for compliance Review contributions for legality
30	MUST READ FEC Treasurer liability policy statement (Dec 2004) Guidance on internal controls Policy statement on minimal internal controls Safe harbor
31	Ads and Other Communications Activities of others
32	Outside Groups
33	Who can pay for a campaign ad? What is off limits? Federal PACs -- no limit Individuals -- No limit, but If “express advocacy,” report > $250 If “electioneering communication,” must report >$10K in a calendar year Corporations (including non-profits) and Unions – no treasury funds for: Express advocacy Electioneering communications
34	What is express advocacy? In 1976, Supreme Court said speech containing “express advocacy” may be regulated to prevent corruption – that is, speech that “expressly advocates” the election or defeat of a candidate. Bright line between advocating a candidate and advocating for an issue Became known as “magic words” test -- “vote for,” “defeat,” “re-elect”
35	Almost 30 years later Supreme Court: Express advocacy test has proved “functionally meaningless” “Call and tell” ads. “… And though he talks about protecting children, Yellowtail failed to make his own child support payments – then voted against child support enforcement. Call Bill Yellowtail. Tell him to support family values.”
36	Electioneering Communications Congress attempts to stop end-run around express advocacy test through “sham issue ads”
37	Electioneering Communications What you need to know No corporate or union funding if: Ad refers to a candidate for federal office Ad runs 60 days before general election; 30 days before primary Broadcast, cable, or satellite Targeted to 50,000 or more of candidate’s potential voters
38	What’s Not Covered? Print, Internet, Telephone, Billboards Federal candidate committees and PACs Grassroots lobbying?
39	Let’s take an example You’re President of a non-profit corporation -- Maybe We Should Leave a Few Children Behind, Inc. You want to run a radio ad two weeks before the elections, urging listeners to “expel” Congressman Jones for “failing Maryland’s children” by supporting ill-conceived education reform
40	Can the nonprofit group pay for this ad without using a PAC? No. It contains express advocacy. What if instead of “expel Congressman Jones,” it says, “call and tell him America’s children need good teachers, not more government tests.” No if runs on TV, radio, or satellite in Jones’s district 30 days before the primary or 60 days before the general.
41	527s Provision of the tax code – allows political organizations to avoid paying tax on contributions All political committees that are registered with the FEC are 527s But not all 527s are registered with the FEC
42	When does a group have to register with the FEC? Make either $1,000 in “expenditures” (express advocacy) or receive $1,000 in “contributions,” AND major purpose is to influence federal elections Political committees may only receive funds from permissible sources and subject to amount limitations
43	2004 – 527s go wild
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45	What has the FEC done?
46	Broader Test for Express Advocacy If an ad is about the candidate’s character or fitness to hold office, and no other genuine issue – even if no words of advocacy If spend over $1,000 on such ads, and major purpose is federal campaign activity, must register
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48	Ashley’s Story
49	Broader test for “contribution” Funds received in response to solicitation is a “contribution” if the solicitation “indicates that any portion of the funds will be used to support or oppose the election of a clearly identified candidate If this solicitation raises > $1000, and major purpose is federal campaign activity, must register
50	Lessons for 2008?
51	Politics and the Internet Pew Research Center
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54	Uncompensated Individuals No Restrictions No Registration or Reporting No Requirement to Disclose Identity No Obligation to Say Whether Message Authorized by a Campaign
55	Exempt Internet Activities Campaign-related blogging Sending or forwarding election related email Providing hyperlink to campaign website Hosting election-related website
56	Only Paid Ads are Regulated Can be contribution or expenditure Disclaimer rules apply Coordination rules apply State and local candidates must use hard money if ad promotes, supports, attacks, or opposes a federal candidate
57	Robocalling
58	What is robocalling? Automatic Dialing-Announcing Devices (ADAD) are major staple of campaigns Select and dial phone numbers and give a prerecorded or synthesized voice message Popular forms – politician or celebrity
59	What laws apply?
60	Coordination
61	What is coordination?
62	Content Requirement
63	Conduct Requirement Must be some evidence that representatives of campaign shared material information about plans, projects, or needs with an outside group, either directly or through an intermediary. And outside group used that information in developing an ad, buying time, etc.
64	Cautions
65	Got all that?
66	TV and Radio
67	"Access to Electronic Media" Access to Electronic Media Equal Opportunities (Equal Time) Lowest Unit Charge – How to buy smart The Public File: Information on other Candidate purchases, requests and dispositions
68	The Key Element of Political Broadcasting Is a Candidate “Use” A “use” is a positive candidate appearance by an identifiable voice or picture for at least 4 sec. A legally qualified candidate The appearance does not have to be controlled or approved by the candidate
69	Positive “Use” Controlled or Approved Bonzo Rule – Ronald Reagan in Bedtime for Bonzo Station Talent Runs for office What if Fred Thompson Runs
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71	Legally Qualified Candidate Must have announced intention to run Must be qualified under state law to hold the office Has qualified under state law to be on the ballot or is qualified for a write-in candidate Presidential candidates must be qualified in the state or in ten states
72	Candidate Access: Two Different Standards Federal candidates — Have access rights State and local candidates — Access at station discretion
73	Federal Candidates Are Entitled to Reasonable Access Stations cannot set limits on amount or type of time that candidates can buy Stations may reject unreasonable requests and negotiate with candidates
74	Program Access (Federal Candidates) Must be offered all categories: prime time, program time May be excluded from news May not be excluded from any other category of programs Subject to negotiation Odd program lengths
75	Equal Opportunities Applies when candidate becomes legally qualified Applies to candidates in same race Seven Day Rule Triggered by non-exempt use
76	Exempt Programs Bona fide newscasts Bona fide news interview programs Bona fide documentaries On-the-spot coverage of bona fide news events (includes station-sponsored debates)
77	Subject of Use Because of the no-censorship rule Candidate may use the time as he or she sees fit Not even required to discuss his or her candidacy What about Problem Ads
78	What about Problem Ads ??
79	What about Problem Ads ??
80	Content Can station refuse to air a political “use” In conflict with another federal statute, such as a use that is indecent or obscene? BRING IN THE LAWYERS!
81	Prior Review Stations may ask to review political advertising in advance to ensure: That it constitutes a “use” by the candidate, and That the ad contains the necessary sponsorship identification, and That it does not exceed the agreed length. Candidate not required to comply – 1 bite rule
82	Rates for Legally Qualified Candidates Apply to all races — federal, state & local Outside the 60 & 45 day periods – COMPARABLE to those charged other advertisers.
83	Political Rates Lowest unit charge applies during political “window” 45 days before a primary or caucus 60 days before a general or special election Use must be in connection with the campaign
84	Lowest Unit Charge WINDOWS 2008
85	PRIMARIES - 2008
86	GENERAL ELECTION NOVEMBER 4, 2008 LUC BEGINS SEPTEMBER 5, 2008
87	Lowest Unit Charge
88	Charges Inside the Political Window Even though buying only a single spot spots, treated as station’s best and highest volume MOST FAVORED advertiser year in and out
89	Who is entitled to LUC? Only candidate “uses” Voice or image must appear Authorized by candidate’s campaign In connection with campaign Not non-authorized 3^rd parties Not ballot issue ads and “issue” ads ALL legally qualified candidates State, local and federal
90	Preemptible Classes of Time Preemptible: Commercial advertiser genuinely “take a significant prospective risk of nonclearance” to pay less
91	Candidate Fixed Time Stations may offer a special “candidate fixed time” General Guide: truly distinguishable from the preemptible less than highest preemptible less than fixed
92	Package Plans: Package plans or bonus spots are not considered a separate class just a volume discount Package containing spots in multiple classes &/or dayparts may be allocated Packages may be allocated over length of the run
93	What to Exclude From the LUC: Barter spots Per-inquiry spots Bonuses for charitable and non-profit organizations Billboards & Program sponsorships Technical or audience-delivery make goods Value-added incentives BUT: Must be offered on the same basis The Network Exception
94	Network Exception Compensation received by each station affiliate not affect own LUC Softwave Media Exchange Google
95	"Memo from Gregg Skall" Memo from Gregg Skall, Womble Carlyle
96	Production Facilities: LUC does not apply Station may charge standard rates. BUT Cannot discriminate between political advertisers. E.g. Free production to only one
97	ADVANCE PAYMENT For federal candidates, stations can require payment no more than seven days in advance For state and local races, station’s commercial advance payment policies apply
98	Three Most important Rules of Political Broadcasting Disclose !!! Disclose !!! Disclose !!!
99	Disclosure Statement Will change during the political season Include: Time classes available to advertisers Anticipated LUC or comparable rate for each class Make good policies Preemptible time practices Any other sales practices
100	Public File - Political File §73.1943 The name of the candidate requesting time (not rate inquiries) The nature and disposition of the request – whether accepted or rejected Record of any free time given All other non-exempt uses
101	Contents of Political File Disposition includes: Schedule purchased Date and time aired Rates charged Class of time purchased Name of candidate to which the spot refers, the office sought, or the issue to which the spot refers In the case of a candidate request, name of the candidate, authorized committee, and treasurer of the committee
102	DISCLAIMERS: WHOSE AD IS IT?
103	WHAT IS A DISCLAIMER A statement that must placed on or included in any “public communication” or electioneering communication Express advocacy or solicitation not required Identifies who paid for the ad and who authorized the ad Presented in a clear and conspicuous manner
104	Bipartisan Campaign Reform Act of 2002 BCRA Sponsorship ID Applies only to Federal races Ads refer to opponent To receive LUC Candidate must be identified, and the following required candidate statement must be made: they authorized or approved the broadcast and that the spot was paid for by the candidate or his authorized campaign committee
105	Bipartisan Campaign Reform Act Federal candidates –Failing to comply are not eligible for lowest unit rates for the remainder of the election period The certificate portion is curable but failure to make stand-by-your-ad statement is not!
106	Federal Candidate Certificate Must state that the candidate will not make direct reference to an opposing candidate in his advertising Unless, at the end of the spot, there is a 4 sec. + statement the spot was authorized by the candidate and paid for by him or his authorized committee and Statement that candidate approved the ad TV spots -- clearly identifiable image of candidate and clearly readable written statement and approved the ad
107	BCRA ID – Radio – Comm Act An audio statement of the candidate in which the candidate identifies himself, states the office he is running for, states that he approves of the broadcast
108	Sponsor Identification All spots must have a proper sponsor ID Must use “paid for” or “sponsored by” Spots paid for by someone other than the candidate must state whether they are authorized by the candidate (FEC) TV — Four seconds; four percent of screen height (20 scan lines)
109	What’s Wrong with This Radio Ad?
110	What’s Wrong With This Radio Ad?
111	What’s Right About This Radio Ad?
112	BCRA ID – Television – Comm Act Either: A full-screen view of the candidate identifying himself and making the required statement, or A candidate voiceover an image the candidate identifies himself makes the required statement Identifies himself and approves message, AND The candidate’s authorized committee paid for the broadcast A clearly identifiable image of the candidate (80% of screen height); and, in either case: A clearly readable written statement of the same information (4% of height, 4 seconds, w/ reasonable color contrast)
113	What’s Wrong with This TV Ad?
114	What’s Wrong with This TV Ad?
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116	What’s the Issue BCRA applies to the Candidate, not the broadcaster Consequence is loss of entitlement to LUC Claims against the Broadcaster – illegal campaign contribution
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119	The Transcript February 14, 2005 Commissioner Weintraub I didn’t measure to make sure it was exactly 80 percent as our regulations provide, but if not it was pretty darn close. And I didn’t think there could possibly be any confusion that he was the guy at issue who was making the disclaimer So: Comm Act Violation: ?? BCRA violation – illegal contribution? Pretty darn close standard
120	Third Party Spots – BCRA Statement Third party spots which advocate the election or defeat of federal candidates, or which solicit campaign contributions, must contain the following: A statement that the spot is not authorized by any candidate; and Audio statement: “____ is responsible for the content of this advertising” Blank identifies political committee or who paid for the broadcast, any organization connected with the payor, and a permanent street address, tel no. & www For TV, an unobscured full-screen view of a representative of the committee or person making the statement plus the text of the statement (4 sec.; color contrast)
121	Third Party Issues Spots – FCC Public File Where the material broadcast is: political matter or controversial issue of public importance, and a corporation, committee, association or other unincorporated group, or other entity is paying for or furnishing the broadcast matter the station shall, in addition, require that a list of the chief executive officers or members of the executive committee or of the board of directors of the corporation, committee, etc shall be made available for public inspection at the location specified by the licensee
122	PRINTED MATERIALS The statement must be in a box
123	SOME DISCLAIMER EXCEPTIONS Inconvenient Bumper stickers, pins, buttons Cell phone messages Impracticable Skywriting, water towers
124	Public File Sponsorship ID Contents §73.1212(e) Any political matter or issue of public importance, and Paid for by Corp, Committee or Assoc.: The name of the person or entity purchasing the time, The name, address and phone number of a contact person, and A list of the chief executive officers, members of the executive committee or of the board of directors of such entity. Network Rule
125	www.wcsr.com
126	www.wcsr.com/telecom
127	TIME FOR YOUR QUESTIONS
128	"Jim Kahl" Jim Kahl — 202-857-4417 jkahl@wcsr.com Larry Norton — 202-857-4429 lnorton@wcsr.com Gregg Skall — 202-857-4441 gskall@wcsr.com