Federal Election Commission Main Page
FEDERAL ELECTION COMMISSION
Washington, DC 20463
February 14, 2005
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 2004-43
Gregg P. Skall, Esq.
Womble, Carlyle, Sandridge & Rice, P.L.L.C.
Seventh Floor
1401 Eye Street, N.W.
Washington, D.C. 20005
Dear Mr. Skall:
We are responding to your advisory opinion request on
behalf of the Missouri Broadcasters Association ("MBA")
regarding whether, under the Federal Election Campaign Act
of 1971, as amended ("FECA"), a broadcaster would be making
a corporate in-kind contribution by selling advertising time
at the Lowest Unit Charge ("LUC")1 to a candidate who may
have failed to include a fully compliant Communications Act
Statement in one of his advertisements and, therefore, may
not be entitled to the LUC under section 315(b) of the
Communications Act. 47 U.S.C. 315(b).
Background
The facts of this request are presented in your letter
of October 29, 2004, as supplemented by your letters of
November 19, 2004, January 21, 2005, and February 8, 2005.
MBA is a voluntary association of broadcasters who are
Federal Communications Commission ("FCC") licensees of radio
and television stations throughout Missouri. In its
request, MBA asks the Federal Election Commission ("FEC") to
assume that Senator Christopher Bond's advertisements did
not contain a fully compliant Communications Act Statement
and that he therefore was not entitled to the LUC. The MBA
then asks about the legal consequences of a broadcaster
having nonetheless afforded the benefits of the LUC to
Senator Bond.
FECA prohibits any corporation from making any
contribution or expenditure in connection with a Federal
election. 2 U.S.C. 441b(a). FECA and Commission
regulations define the terms "contribution" and
"expenditure" to include any gift of money or anything of
value for the purpose of influencing a Federal election. 2
U.S.C. 431(8)(A)(i) and 431(9)(A)(i); 11 CFR 100.52(a) and
100.111(a); see also 2 U.S.C. 441b(b)(2) and 11 CFR
114.1(a)(1) (providing a similar definition for
"contribution or expenditure" with respect to corporate
activity). Commission regulations further define "anything
of value" to include all in-kind contributions and state
that, unless specifically exempted under 11 CFR 100.71(a),
the provision of any goods or services (including
advertising services) without charge, or at a charge which
is less than the usual and normal charge for such goods or
services, is a contribution. 11 CFR 100.52(d)(1); see also
11 CFR 100.111(e)(1).
The Bipartisan Campaign Reform Act of 2002, P.L. 107-
155, 116 Stat. 81 (March 27, 2002) ("BCRA"), amended section
315 of the Communications Act of 1934, 47 U.S.C. 315(b),
such that a Federal candidate "shall not be entitled" to the
LUC if any of his advertisements makes a direct reference to
his opponent and fails to contain a statement identifying
the candidate and stating that the candidate approved the
communication (the "Communications Act Statement"). For
radio broadcasts, the Communications Act Statement must
consist of a personal audio statement by the candidate
identifying himself and the office sought, and stating his
approval of the message. In the case of television
advertisements, for a period of no less than four seconds at
the end of the ad, there must appear simultaneously (i) a
clearly identifiable photographic or similar image of the
candidate; and (ii) a clearly readable printed statement,
identifying the candidate and stating that he has approved
the broadcast and that his authorized committee paid for the
broadcast.
BCRA also amended section 441d of FECA to include a
similar, though not identical, required statement in
political advertisements (the "FECA Statement"). The FECA
Statement for any radio advertisement, whether or not the ad
mentions a candidate's opponent, requires the candidate to
identify himself, and state that he approved the message.
The FECA Statement does not require a candidate to state the
office he is seeking. For any television advertisement, the
FECA Statement requires a candidate to identify himself and
state that he approved the communication. This must be done
either (1) while an unobscured, full-screen view of the
candidate is displayed, or (2) by means of a voice-over by
the candidate, accompanied by a clearly identifiable
photographic or similar image of the candidate. The
statement must also appear in writing at the end of the
communication in a clearly readable manner with a reasonable
degree of color contrast between the background and the
printed statement, and for a period of at least four
seconds. 2 U.S.C. 441d(d)(1); see also 11 CFR 110.11(c)(3).
Although the Communications Act generally requires
broadcasters to charge candidates the LUC for a candidate's
political advertisements in the 45 days preceding a primary
election and the 60 days preceding a general election, BCRA
amended 315(b) of the Communications Act to provide that a
Federal candidate "shall not be entitled" to receive the LUC
if any of his advertisements failed to include a fully
compliant Communications Act Statement. 47 U.S.C. 315(b).
Specifically, once a broadcaster airs a Federal candidate's
political advertisement that does not contain a fully
compliant Communications Act Statement, that candidate is no
longer guaranteed the LUC for any advertisement aired in the
remaining days leading up to the election.
Questions Presented
Does a broadcaster make an in-kind contribution by
charging a Federal candidate the LUC for advertising time
when the candidate may not be "entitled" to the LUC under
the Communications Act? If the LUC is an in-kind
contribution, must the broadcaster re-bill the candidate
for the difference between the LUC and some higher rate?
The Commission concludes that a broadcaster's decision
to offer Senator Bond the LUC under these circumstances did
not result in an in-kind contribution under FECA and
Commission regulations.
The Commission has reviewed the ads provided by MBA and
has concluded that there is no violation of any disclaimer
requirement over which the Federal Election Commission has
jurisdiction. The Commission notes that the disclaimer
requirements in the Federal Election Campaign Act are
substantially similar to those in the Communication Act, and
that the FEC has substantial expertise in evaluating
disclaimer issues. Moreover, the FCC has not, to our
knowledge, come to a contrary conclusion, either through
evaluation of the merits in this case or by promulgating
regulations (under the disclaimer provisions of the
Communications Act) that would warrant a different result.
Because the Commission concludes that there is no
evidence of a violation of the disclaimer requirements,
providing the LUC did not, in this instance, result in an in-
kind contribution. The Commission need not reach your
question regarding re-billing.
The conclusion in this response constitutes an advisory
opinion concerning the application of the Act and Commission
regulations to the specific transaction or activity set
forth in your request. See 2 U.S.C. 437f. The Commission
emphasizes that if there is a change in any of the facts or
assumptions presented, and such facts or assumptions are
material to a conclusion presented in this advisory opinion,
then the requestor may not
rely on that conclusion as support for its proposed
activity.
Sincerely,
(signed)
Scott E. Thomas
Chairman
Concurring Opinion of Chairman Scott E. Thomas
Re Advisory Opinion 2004-43
In this matter the central question was whether a
broadcast station could offer "lowest unit charge" (LUC) to
a candidate campaign that purportedly had not complied with
the `stand by your ad' component of the Bipartisan Campaign
Reform Act.2 In determining whether a station has made an
in-kind contribution by charging too little, the FEC
normally must analyze whether a station has provided its
services for the "usual and normal" charge in a commercial
sense. 2 U.S.C. 431(8)(A); 11 C.F.R. 100.52(d).
Nonetheless, if the station was required to offer LUC by
operation of law, there would be no basis for the FEC to
find that the station had violated the in-kind contribution
prohibition of 2 U.S.C. 441b.3 This becomes, in essence,
the initial level of analysis in these circumstances.
The FEC, therefore, was placed in the awkward position
of trying to divine whether the stations here involved were
required by operation of law to offer LUC airtime to the
Bond campaign. According to the applicable BCRA provisions,
a station is only required to offer LUC if a candidate
satisfies the `stand by your ad' disclaimer rules. In
theory this is a matter for the FCC to decide, but the FEC
cannot expect the FCC to rule on each matter brought to the
FEC's attention. In my view, if asked in an advisory
opinion context, the FEC is required to do its best to
assess how the FCC would apply the `stand by your ad' rules
in order to determine whether the stations in question were
required to offer LUC.
After reviewing the ads of the Bond campaign that
raised questions on the part of the stations, I conclude
that the FCC most likely would say that the `stand by your
ad' requirements were met. In the case of the television
ad, the image of the candidate is sufficient to satisfy the
`clearly identifiable image' requirement of 47 U.S.C.
315(b)(2)(C)(i), in my view. As for the radio ad, though
there is no express indication of which office is sought
(see 47 U.S.C. 315(b)(2)(D)), I don't see any reasonable
ambiguity about which office is at stake, and I see no basis
for believing the FCC would find the disclaimer inadequate
when viewed in its entirety. Accordingly, my assessment is
that the FCC would conclude the stations were required to
offer airtime at the LUC. That means the FEC must conclude
in this advisory opinion that no undercharge resulted
warranting a rebilling of the candidate.4 I joined in
approval of the language offered by Commissioner Weintraub
because it basically follows this approach.
I do not subscribe to the view that stations would be
able to offer LUC to a candidate who had not satisfied
`stand by your ad' requirements simply because some other
candidates were required to be given LUC. While the FEC
ruled in the pre-BCRA era that stations willing to treat all
candidates the same could provide ad time for free,5 the
`stand by your ad' provisions in BCRA signaled a significant
change in Congress's approach in this area. It is very
clear to me that candidates who do not comply with the new
disclaimer requirements are to be prevented from getting the
benefit of LUC.6 Thus, any previous FEC rulings allowing
stations great latitude to charge less than "usual and
normal" commercial charges for ad time must be read in a way
consistent with the strict new BCRA provisions. In my view,
the only way to give all the applicable provisions meaning
is to subject a candidate that has not complied with the
`stand by your ad' requirements to the "usual and normal"
commercial charge analysis.7 Since the stations in question
routinely must make such calculations outside the LUC
timeframes, I see little problem with placing that burden on
them.8
A caution about deferring to the FCC's legal tilt is in
order. The FCC indeed may have no concern about stations
offering time at LUC to a non-complying candidate. Though I
find that an untenable construction of the `stand by your
ad' provisions, I note it stems from a completely different
regulatory focus: ensuring that stations offer reasonable
access and equal opportunity to candidates. Indeed, the FCC
would be satisfied by stations offering ad time for
absolutely no charge across-the-board to candidates.9 That
is far afield from the usual focus of the FEC: assuring
that vendors don't provide services for less than the "usual
and normal" commercial charge.
In sum, the facts at hand suggest the stations would be
required to provide air time to the candidate at LUC.
Therefore, by operation of law there is no basis for the FEC
to conclude that a different rate should have been charged.
While the legal assumption underlying this conclusion might
prove faulty if the FCC were to rule specifically in this
set of circumstances, the FEC for the time being must
proceed with its own best assessment of the LUC obligations
of the stations seeking guidance.
2/16/05 / s /
____________________
_________________________________
Date Scott E. Thomas
Chairman
CONCURRING OPINION OF COMMISSIONER DAVID MASON
RE: ADVISORY OPINION 2004-43
This request was premised on an assertion that Senator
Christopher Bond had "lost his entitlement" to the Lowest
Unit Charge (LUC) provision of the Communications Act due to
alleged deficiencies in the "stand by your ad" disclaimer
required by the Communications Act, 47 U.S.C.
315(b)(2)(C), (D), and the Federal Election Campaign Act
(FECA), 2 U.S.C. 441d(d)(1), as amended by the Bipartisan
Campaign Reform Act (BCRA), P.L. 107-155, 116 Stat. 1981
(March 27, 2002). The Commission concluded, contrary to the
asserted premise, and in the absence of regulations or other
guidance from the Federal Communications Commission (FCC),
that the disclaimers in the subject advertisements sufficed
for the LUC discount, and responded to the request on that
basis.
Although individual Commissioners have expressed views
about how the Communications Act and the FECA might be
applied to inadequate or absent disclaimers, see, e.g.,
Concurring Opinion of Chairman Scott Thomas Re: Advisory
Opinion 2004-43 (Feb. 16, 2005), Dissenting Opinion in
Advisory Opinion 2004-43 of Vice Chairman Michael Toner and
Comm'r Bradley Smith (Feb. ____, 2005), Advisory Opinion
2004-43 cannot be read to mandate, and should not be read to
suggest, any conclusion as to that hypothetical
circumstance, which the Commission concluded was not
properly before it.10 The absence to this date of FCC
interpretation of the Communications Act provisions at
issue, and their implications for broadcast license holders,
provides further caution against drawing broad conclusions
from this pinion.
Put even more generally, addressing this request on
specific factual grounds does not provide guidance for
applying the law in materially different circumstances.
Thus, it is incorrect to describe this Opinion as a vote "to
deny broadcasters [a] broad waiver." Kenneth Doyle, FEC
Votes 4-2 to Deny Broadcasters Broad Waiver From BCRA
Requirement, BNA Money & Politics Report, Feb. 15, 2005
(headline). Answering an Advisory Opinion Request on one
ground does not suggest any conclusion about different
circumstances. Put specifically, the conclusion that
disclaimers in two particular ads are sufficient under the
"stand by your ad" provisions of the FECA, 2 U.S.C.
441d(d)(1), has no bearing on the obligations of
broadcasters under the Communications Act (or the FECA) in
relation to ads with inadequate (or no) disclaimers.
Individual Views
Because discussion of this request in the Commission's
Open Meeting did include speculation about what rules might
apply to inadequate or absent disclaimers (and indeed two
draft opinions accepted the premise that disclaimers in the
subject ads were inadequate), I will add some individual
comments on factors bearing on whether broadcasters must
charge candidates a rate higher than the LUC when candidates
are not entitled to the LUC under the Communications Act or
by virtue of their advertising purchases on the same basis
as any other advertiser.
First, I note that any such discussion must begin with
the Communications Act, regarding which this Commission has
neither jurisdiction nor expertise. Whether a broadcaster
must charge a higher rate to an advertiser who is not
entitled to a discount mandated by the Communications Act is
a question the FCC may be best equipped to answer. (Certain
FECA conclusions, however, might follow from Communications
Act interpretations the FCC may make.) The FCC may, in
addition, have its own views on what qualifies as sufficient
compliance with the Communications Act disclaimer
requirements, which are similar to, but not identical to
those in the FECA. Compare 47 U.S.C. 315(b)(2)(C), (D)
with 2 U.S.C. 441d(d)(1). Apparently other Communications
Act provisions or FCC regulations, including those requiring
equal access for candidates, 47 U.S.C. 315(a), public
interest requirements, id. 307(a), 309(a), and perhaps
those bearing on the responsibilities of licensees more
generally may interact with and affect broadcasters'
responsibilities under the "stand by your ad" provisions.
Some have argued, see Letter of Democracy 21, Campaign
Legal Center, and Center for Responsive Politics to Lawrence
Norton (Feb. 11, 2005); Letter of Democracy 21, Campaign
Legal Center, and Center for Responsive Politics to Lawrence
Norton (Dec. 15, 2004); Concurring Opinion of Chairman Scott
Thomas Re: Advisory Opinion 2004-43 (Feb. 16, 2005), that
failure to qualify for the LUC discount to which certain
candidates are entitled under the Communications Act should
lead axiomatically to a conclusion that the LUC is not the
"usual and normal charge," 11 C.F.R. 100.52(d)(2)
(definition); id. 100.111(e)(2) (definition), for purposes
of the FECA. This simple calculus, however, combines
concepts from different statutes, the interaction of which
may not be simple or straightforward. In addition, both
legal schemes have other provisions, see 47 U.S.C. 315(a)
(equal access); Memorandum of the Office of General Counsel
to the Commission, Agenda Doc. No. 05-08 at 5 (Feb. 8, 2005)
(revised blue draft of AO 2004-43) (noting that the
Commission has held "that discounts that are less than the
usual and normal charge are not contributions if such
discounts are offered in the ordinary course of business"
(citing AO 2004-18, 1996-2, 1989-14)), which may mandate or
permit discounts. The interaction of multiple provisions of
these separate legal schemes combined with the variety and
complexity of commercial advertising sales practices, see
Letter of National Ass'n of Broadcasters to Mary Dove (Feb.
11, 2005), may make it impossible to derive a single, simple
proposition to address the variety of circumstances which
may occur. Senate debate on this provision does, however,
provide some support for a "don't stand by your ad, don't
get the discount" interpretation, which should not be
ignored in formulating policy or rendering individual
decisions relative to these disclaimer requirements.
I am sympathetic to pleas by the requestors and other
broadcasters, see id.; Letter of Missouri Broadcasters Ass'n
to Lawrence Norton (Nov. 19, 2004), not to be enlisted as
enforcement agents for campaign finance law. In this
request the broadcasters apparently came to a good faith
conclusion that Senator Bond's ads did not qualify for the
mandatory LUC discount. This Commission came to a different
conclusion. Had the broadcasters sought to charge Senator
Bond's committee a rate higher than LUC, they would, in this
Commission's interpretation, have violated Section 315 of
the Communications Act. I see no reason why this agency or
our sister commission should cede to, much less thrust upon,
broadcasters authority both to interpret our governing
statutes and to exercise enforcement authority (through
differential rate charging) under both Acts. Indeed, such
delegation is arguably contrary to the FECA. See 2 U.S.C.
437c(b)(1) (providing that the Commission "shall have
exclusive jurisdiction with respect to civil enforcement" of
FECA). The variety of interpretations which might be
reached by thousands of broadcasters in hundreds of federal
campaigns could hardly be expected to produce a clear and
consistent policy.
Discussion of this variety of factors does not lead me
to conclude that it is impossible to craft a clear and
effective policy regarding the obligations of broadcasters
under the "stand by your ad" provisions, and the interaction
of those obligations with the FECA. However, such a policy
cannot be crafted by this Commission independently of the
Federal Communications Commission or without regard to the
several statutory and regulatory provisions involved as well
as to appropriate adjudicatory and remedial procedures.
While the FCC has responsibility for interpretation and
enforcement of the Communications Act, it may well be that
some cooperative efforts between this agency and the FCC in
interpreting parallel statutory requirements and in
assessing interactions between the statutory schemes would
be helpful.
Nor should our critics hasten to declare that our
reticence to opine on obligations of broadcasters under the
Communications Act means that we are abdicating our
responsibility or failing to enforce the law. The "stand by
your ad" disclaimer requirements are incorporated in the
FECA, 2 U.S.C. 441d(d)(1), and campaigns that fail to
comply with them are subject to normal FECA enforcement
remedies. The Commission certainly can, and in my view
should, consider the value of any LUC discount which a
campaign received but may not have been entitled to by
virtue of a failure to "stand by your ad" in seeking a
penalty for any violation. As suggested above, resolution
of allegations of violations through the statutory processes
outlined in 2 U.S.C.
437c(b)(1) is preferable to (and arguably exclusive of) a
system in which individual broadcasters attempt to interpret
and enforce the combination of FECA and Communications Act
requirements either sua sponte or in response to charges
from competing campaigns.
____February 17, 2005______________
_signed________________________
Date David Mason
Commissioner
DISSENTING OPINION IN ADVISORY OPINION 2004-43
of
VICE CHAIRMAN MICHAEL E. TONER AND
COMMISSIONER BRADLEY A. SMITH
The requestor in this advisory opinion request asked
whether a broadcaster was legally prohibited from offering
the "lowest unit charge" ("LUC") to a campaign committee
that allegedly failed to comply with the "stand by your ad"
disclaimer provisions of the Bipartisan Campaign Reform Act
of 2002 ("BCRA").11 The Commission concluded that because
the candidate ads in question satisfied the disclaimer
requirements of the Federal Election Campaign Act, the
broadcaster's decision to provide the LUC, in this instance,
did not result in a prohibited in-kind corporate
contribution to the candidate.12
We dissented from the majority opinion because we
believe that the question squarely before the Commission did
not turn on the adequacy of the disclaimers in the ads but
rather whether, under the plain meaning of the statutory
provisions, broadcasters may legally offer federal
candidates the LUC. We believe that the Commission could
have answered the question more definitively and provided
useful and meaningful guidance to other broadcasters
similarly situated. Accordingly, for us, whether the
candidate ads at issue here satisfied the "stand by your ad"
disclaimer requirements is irrelevant because broadcasters
have broad statutory discretion to provide candidates with
the LUC, even for candidate ads that do not meet the
disclaimer requirements.
BCRA amended 315(b) of the Communications Act to
provide that a federal candidate "shall not be entitled"
[emphasis added] to receive the LUC if any of his
advertisements have failed to include the required
Communications Act Statement. 47 U.S.C. 315(b). Under the
plain meaning of these statutory provisions, a candidate who
satisfies the Communications Act Statement requirement is
guaranteed the LUC as a matter of law. It is equally plain
under these statutory provisions that a candidate who fails
to include the Communications Act Statement does not have a
legal guarantee to receive the LUC. In this circumstance,
the statutory language is permissive, making clear that
broadcasters have the discretion to provide the LUC to
candidates who fail to include the Communications Act
Statement, but are not legally required to do so.
Therefore, although a candidate may not be "entitled to" the
LUC if his ad lacks an adequate disclaimer, the candidate
may nevertheless receive the LUC at the discretion of the
broadcaster.
This interpretation is consistent with how the FCC has
construed the BCRA amendments to the Communications Act.
See footnote 5, Agenda Doc. 05-08 (FCC has interpreted BCRA
amendments to allow a station to offer the LUC to a
candidate who fails to include an adequate Communications
Act Statement, as long as the station treats all Federal
candidates in a consistent, non-discriminatory manner). See
also McConnell v. FEC, 540 U.S. 93, 364 (2003) (Stevens, J.,
dissenting) (observing that the statute "does not require
broadcast stations to charge a candidate higher rates for
unsigned ads that mention the candidate's opponent. Rather,
the provision simply permits stations to charge their normal
rates for such ads.") (emphasis in original).
Accordingly, we believe the law plainly permits
broadcasters to provide candidates with the LUC, regardless
of whether the candidates' ads satisfy the "stand by your
ad" disclaimer rules, and we believe the Commission should
have decided this matter on that basis.
February 17, 2005
___(signed)___________________
Michael E. Toner, Vice Chairman
__(signed)_____________________
Bradley A. Smith, Commissioner