Lawyer Article

Previously published in the Law & Policy Newsletter of the American Society of Association Executives. Republished with permission.

Earlier this year, in a ruling heralded by free speech advocates, the U.S. Supreme Court removed restrictions on issue-based ads financed by corporations—including incorporated associations—during the political season. The ruling, Federal Election Commission v. Wisconsin Right to Life, permits corporate financing for pre-election ads that refer to federal candidates, so long as the ads can be read some way other than as an appeal to vote for or against a federal candidate.

In late November, however, the Federal Election Commission (FEC) complicated the picture for organizations interested in airing issue ads by drafting and implementing rules that appear to give federal regulators a prominent role. There are new legal terms in the FEC rules, a newly-created "safe harbor" for some ads, and a "tie-goes-to-the-advertiser" rule—all of which deserve careful attention until there is more guidance as to how these rules will be interpreted and applied.

Just what are the stakes for associations? For associations that are careful in crafting issue-based ads, there is a new opportunity in 2008 to sway public opinion and influence decision-makers—all during a period when people are paying greater attention. On the other hand, if ads are not carefully tailored to comply with the new FEC regulations, associations could be subject to investigations and stiff fines by the FEC or even prosecution by the Justice Department. Indeed, over the past few years both the FEC and the Justice Department have been more aggressive in prosecuting campaign finance law violators.

Supreme Court Rejects Broad Sweep of McCain-Feingold Law
The Wisconsin Right to Life (WRTL) case involved a challenge to a key part of the 2002 McCain-Feingold law—the "electioneering communications" provision—which bans corporations and unions from using general treasury funds to pay for ads on television, radio or satellite that mention a federal candidate and that are run shortly before the elections (30 days before a primary and 60 days before a general election). The ban is aimed at so-called "sham issue ads," such as ads that characterize a candidate's position on an issue and urge viewers or listeners to call and tell the candidate how they feel (ex. "Call Senator Jones and tell him to stop condoning torture.").

The ban certainly encompasses the "sham issue ads," but because of its breadth, it also sweeps in many more communications. For example, legitimate issues ads that mention a candidate would be captured by the electioneering communication provisions, as would ads for an automobile dealership if the candidate's name is included in the company name.

In WRTL, the prolife group, Wisconsin Right to Life, argued that the blackout could not be constitutionally applied to ads it wanted to air relating to the filibuster of President Bush's judicial nominees. Five justices—a bare majority—agreed that the U.S. Constitution does not permit a ban on pre-election ads—even if financed by corporations or unions—so long as the ad can be viewed in some way other than as an appeal to vote for or against a specific candidate. The McCain-Feingold ban, according to Justice Roberts's controlling opinion, may only be applied to ads that contain "express advocacy"—phrases such as "vote for," "defeat," or "elect"—or its "functional equivalent."

Chief Justice John Roberts insisted that the court was not overturning the blackout under all circumstances, but three justices who also sided with WRTL thought the court should have done exactly that. And the four dissenting justices argued that the practical effect of the court's ruling was to allow a free-for-all for sham issue ads.

Indeed, the court's test provides great latitude for associations to engage in political speech that focuses on public issues. The court ruled that a speaker's intent is irrelevant, fearing that if this were part of any test, it could lead to the bizarre result that identical ads aired at the same time could be protected speech for one speaker, but not another. Roberts emphasized that the ruling provided a "safe harbor" for those who wish to exercise First Amendment rights.

The court acknowledged the practical difficulties of fashioning a test because the distinction between speech about issues and speech about candidates may often dissolve in practical application. Nonetheless, the court affirmed that the discussion of issues cannot be suppressed simply because they may also be relevant in an election context. In the court's view, where "the First Amendment is implicated, the tie goes to the speaker, not the censor."

FEC Rules: Implementing WRTL or Complicating It?
This fall, attention shifted from the Supreme Court to the FEC, which decided that new rules were necessary to spell out how the ruling would apply to the thousands of WRTL-type ads that were sure to hit the airwaves. The FEC had plenty of incentive to act quickly. With presidential primaries set earlier than in past election cycles, the first of the electioneering communication blackout periods was scheduled to begin in December.

The FEC approved new electioneering communication rules on November 20, 2007. The rules create a number of new legal terms and phrases, provide for a "safe harbor," and seem to reserve an unexpected degree of discretion for the FEC in considering which ads are permissible. Suddenly the picture became cloudier.

So what do the FEC's new rules say? The first important thing to know is that some issue ads will qualify for the newly-created safe harbor while others will not.

An electioneering communication will only satisfy the safe harbor if it clears all of the following tests:

1) The communication does not mention any election, candidacy, political party, opposing candidate, or voting by the public.

2) It does not take a position on any candidate's character, qualifications, or fitness for office.

3) It focuses on an issue and urges the candidate to take a position on it or urges the public to contact the candidate about that issue.

The rules also create a safe harbor for commercial speech if it satisfies the first two elements, and it "proposes a commercial transaction" with regard to a product or a service.

Just how "safe" this harbor is remains to be seen. It is clear, however, that its terms are not straightforward. When can one say that an ad does not "take a position on the candidate's qualifications for office?" A critical statement about a candidate's position on an issue surely says something about his or her qualification for office. Consider an ad that would say, "Call Hilary Clinton, and tell her that her health care proposal will bankrupt America." Similarly, what constitutes mentioning any election? What if an ad says, "Call Mitt Romney and tell him his approach to immigration reform doesn't work in 2008." Does this refer to the 2008 election?

Apparently anticipating that many ads will not satisfy every element of the safe harbor, the rules provide that some issue ads and other communications may still be funded by corporations or unions. If an ad does not qualify for a safe harbor permission, the FEC will "consider" certain factors "to determine whether, on balance," the communication meets the Supreme Court's test—that is, whether it is "susceptible of no reasonable interpretation other than an appeal to vote for or against a clearly identified Federal candidate."

This case-by-case approach is a far cry from what the Supreme Court seemed to have in mind in emphasizing that all ads are constitutionally protected, other than those containing express advocacy or its functional equivalent. In fact, the Explanation and Justification (E&J) for the new rules, which the FEC issued on December 14, 2007, highlights the central role it will occupy in scrutinizing ads that qualify as electioneering communications. It is also apparent that the safe harbor provisions and "rules of interpretation" will not result in a high degree of predictability. Rather, the E&J underscores the careful analysis and balancing of facts the FEC will undertake to apply its new rules to each communication.

The FEC does offer some comfort to those whose ads do not satisfy the elements of the safe harbor. First, the rules provide that in interpreting a communication "any doubt" will be resolved in favor of permitting the communication. Also, the FEC has published in the E&J and will post on its website examples of permissible and not permissible communications. One of those examples confirms that the ads addressed in WRTL are now protected by the "issue ad" safe harbor. Therefore, an ad that urges specific members of Congress to oppose judicial filibusters and does not mention an election or voting by the public would be protected under the new rules. Similarly, the FEC's examples show how the owner of an automobile dealer could run for federal office and air television ads in the blackout period under the protection of the "commercial ad" safe harbor. By contrast, an ad that accuses a candidate of having a history of domestic violence would not be saved by a tagline that viewers should tell him to "support family values." In the FEC's view, this ad would not be protected under either the safe harbor or other rules of interpretation.

These examples are helpful to the extent that an organization wants to air a communication that is substantially similar to a permissible example. But the lengthy examples in the E&J and their detailed explanations underscore the careful analysis that the FEC will undertake. As a result, the examples have more limited utility with regard to situations that differ to any substantial degree. In those instances, the sponsors of the ads must attempt to divine how the FEC will apply its safe harbors and balancing factors.

Finally, the new FEC rules retain disclosure and reporting obligations for organizations whose electioneering communications are protected by WRTL. In other words, a corporation or union that may now fund an issue ad still must publicly disclose the disbursement of funds by filing a report with the FEC. Associations should exercise caution here as well. The reporting obligations for an association could differ depending on whether it funds communication on its own or whether it accepts contributions from others to share the cost of the communication.

The Upshot: ‘Air' on the Side of Caution
Advocacy groups are already filling the airwaves with ads that would have been prohibited before the WRTL decision. There is little doubt that incorporated trade associations, nonprofits, unions, and others will remain active throughout 2008 in using this new capacity to influence debate and decision-making.

By sitting on the sidelines, associations risk allowing opposing messages to dominate debate. This new authority should be exercised with caution, however. Experienced counsel can help ensure that ads are crafted in accordance with the WRTL decision and FEC regulations and that ad sponsors avoid scrutiny from regulators and possible sanctions.

Lawrence H. Norton and James A. Kahl served as General Counsel and Deputy General Counsel, respectively, of the Federal Election Commission, spanning the period from September 2001 to March 2007. As leaders of the FEC's legal team, Norton and Kahl played a critical role in every aspect of implementation and enforcement of the landmark McCain-Feingold law, including the litigation of the Wisconsin Right to Life case. They currently lead the Political Law Practice at Womble Carlyle Sandridge & Rice, PLLC.