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FEC Lays Out Timetable to Consider Possible Internet Regulations

The Federal Election Commission today opened a hotly anticipated rulemaking on the thorny subject of how to regulate certain types of political activities on the Internet.

The agency laid out a timetable that includes hearings in late June and a target of approving final rules by September. FEC Chairman Scott Thomas noted that this timetable would allow new rules to be put in place before the 2006 campaign season gets into high gear.

But sticking to that schedule, a tight one by FEC standards, may not be easy.

The idea of the FEC overseeing political activity on the Internet has already ignited a firestorm of controversy in the blogosphere over how far the FEC’s reach could extend and whether, for instance, those who keep Web logs (or “bloggers”) could be dragged into the campaign watchdog agency’s regulatory net.

The FEC’s first official action on the matter provided more questions than answers, as the agency issued a 46-page draft proposal for how it might differentiate between different types of political communications in cyberspace.

The draft rules issued this week, which were written by the FEC general counsel’s office in consultation with FEC commissioners, would extend the current media exemption from FEC regulation. Currently granted to the traditional media, it would be extended to media entities whose activities also have an online presence, or exist solely online, on a case-by-case basis.

The draft rules would “make clear that the media exemption applies to the Internet,” said FEC member Ellen Weintraub.

The proposal — which is still in the very initial stages of consideration — would also exempt any Internet activity conducted by unpaid individuals or volunteers on a campaign, so long as they were doing such activities on their own computers in their own homes, or on publicly available equipment.

But would, or should, all bloggers automatically be protected? There is less agreement on that issue.

The FEC’s notice — which, once published in the Federal Register, will kick off a 60-day public comment period — asks for the public’s opinions on “whether bloggers, whether acting as individuals or through incorporated or unincorporated entities are entitled to the statutory exemption.

“Can on-line blogs be treated as ‘periodical publications’ within the meaning of the exemption? If not, why not? Is the media exemption to be limited to traditional business models, meaning entities that finance operations with subscription or advertising revenue? The Commission also seeks comment on whether on-line forums qualify for the exemption.”

FEC Members expressed vastly different views on the impact of the agency’s eventual actions in this area.

Current FEC Chairman Scott Thomas, a Democrat, acknowledged at the outset of Thursday’s open meeting that the task was “not an easy matter to fit into the legal framework we have.”

Meanwhile, three Republican members of the commission expressed serious reservations about treading into such terrain at all.

“I fear once we start down this road it will be more difficult to limit where we proceed,” said David Mason, a GOP member of the body.

Although Mason said he was “glad” that his colleagues were attempting with their proposed regulations to exempt bloggers from regulation, he believes there are still reasons to “be concerned about it.”

He was the sole commissioner to oppose the issuance Thursday of the proposal for rulemaking.

Fellow Republican Brad Smith, for his part, used the meeting as a forum to defend himself from recent attacks by critics who have argued that Smith has been overstating the ultimate impact the FEC regulations could have on cyberspace.

Contrary to the notion that he had any “hidden agenda” — as some of his opponents have suggested — Smith said the history of the issue bears out the fact that some advocates of campaign finance reform view the Internet as a potential source of mischief and hidden loopholes that should be subject to regulation.

During the debate three years ago over the Bipartisan Campaign Reform Act of 2002, backers of the measure defeated an amendment proposed by then-Majority Whip Tom DeLay (R-Texas) that would have entirely exempted the Internet from the law. Proponents of BCRA painted the amendment as a “poison pill” and an “Internet loophole” that would have “undermined BCRA,” Smith said.

“There are people who don’t see that the Internet can only be seen as a force for good,” he remarked.

Indeed, the original sponsors of BCRA have said that they never intended to fully exempt Internet activities from the scope of their law — and when the FEC chose to do so, the House sponsors of the bill filed suit in federal court to overturn those rules and several others with which they disagreed.

U.S. District Court Judge Colleen Kollar-Kotelly agreed with Reps. Christopher Shays (R-Conn.) and Martin Meehan (D-Mass.), and in September 2004 struck down the FEC’s blanket exemption for Internet activities from the definition of “public communication,” arguing that it would seriously undermine the BCRA.

Such a “loophole,” they argued and Kollar-Kotelly agreed, would effectively allow corporations or unions to pay for advertising for a federal candidate on Web sites even if they were coordinating those ads directly with the candidate. It would also allow state parties to spend unlimited amounts of soft money on Internet advertising promoting or attacking a candidate, even though such communications would be illegal if placed on TV, or radio, or in a newspaper or magazine.

But Weintraub assured the public Thursday that the FEC’s preliminary efforts in this area would not have far-reaching or chilling effects. She insisted that the judge’s decision does not mean the agency must regulate all, or even “very much,” Internet activity — and that the FEC doesn’t intend to do that anyway.

Instead, the draft issued this week focuses on paid advertising and political “spam” e-mail that is sent to lists acquired in commercial transactions — an approach that Weintraub characterized as “restrained.”

“The direction that everyone is urging us to take is the direction we were headed in already,” Weintraub said. “Some of the most spirited debates that have taken place in the course of preparing this notice have concerned how best not to regulate certain activities, such as blogging.”

She added, “However we resolve it, I think it’s pretty clear that the result is not going to be bad for bloggers.”

But the regulated community, including a former colleague of Weintraub’s at the law firm Perkins Coie, appeared more circumspect of the proposal.

Bob Bauer, a leading Democratic election lawyer at Perkins Coie, agreed that the proposal was “restrained,” but he noted that “some dangers still lie ahead.”

“This was always the minimum cost of the Commission’s decision to proceed with a regulatory initiative centered on the Internet,” Bauer wrote on his own popular Web log, “It was, in the first instance, a decision to regulate; and so any allowance or exemption was necessarily an act of grace, as easily withdrawn or conditioned as it was granted.”

On the site, Rick Hasen, a professor at Loyola Law School in Los Angeles, called the draft proposal “good news for the blogosphere” but also expressed reservations.

“The FEC’s first stab at writing new rules raises as many questions as it seeks to answer, and we must remain wary of both intended and especially unintended consequences,” he wrote.

More than a dozen Members of Congress have already weighed in on the FEC’s early efforts in recent letters.

Fourteen members of the House Judiciary Committee sent a letter to FEC officials earlier this month asking the agency to explicitly protect blogs from disclosure requirements, campaign finance limitations and other regulations “simply because [they contain] political commentary or includes links to a candidate or political party’s website, provided that the candidate or political party did not compensate the blog for such linking.”

Senate Minority Leader Harry Reid (D-Nev.), meanwhile, informed the FEC in a March 17 letter that he had “serious concerns” regarding its pending rulemaking and notified commissioners that he has introduced legislation to make clear that Congress “did not intend to regulate this new and growing medium” in BCRA.

“Regulation of the Internet at this time, with its blogs and other novel features, would blunt its tremendous potential, discourage broad political involvement in our nation and diminish our representative democracy,” he wrote.

Last week, the key Congressional sponsors of BCRA — Sens. John McCain (R-Ariz.) and Russ Feingold (D-Wis.) and Reps. Meehan and Shays — sent a separate letter to the FEC.

“We are confident that the Commission can find a way in its rulemaking to allow unregulated and robust political debate on the Internet, such as that seen on independent blogs, to continue, without creating loopholes for soft money to once again flow into federal campaigns,” BCRA’s sponsors wrote in their letter.

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