Federal Election Commission Main Page
February 11, 2000
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1999-37
Michael J. Panetta, Executive Director
X-PAC
3509 Connecticut Avenue, NW #175
Washington, DC 20008
Dear Mr. Panetta:
This refers to your letters dated November 11 and
October 18, 1999, on behalf of X-PAC: The Political Action
Committee for Generation X ("X-PAC") concerning the
application of the Federal Election Campaign Act of 1971, as
amended ("the Act"), and Commission regulations to X-PAC's
proposed political advertising that would promote use of the
Internet to make independent expenditures.
FACTS
You are the executive director of X-PAC which has
created several political advertisements or communications
in various electronic formats. These communications have
content that advocates the election or defeat of specific
candidates for Federal office. You explain that they were
made without consultation with any candidate's campaign or
committee, and you assert that the advertisements would be
considered "independent expenditures" under the Act. You
further state that these advertisements are "native" to the
Internet in that they were created specifically for
electronic distribution and were never intended to be shown
or presented as "paid media" on either television or radio.
In addition, you explain that these communications,
were developed "in-house" by X-PAC using commercially
available software and will be hosted on its web site at no
additional cost beyond what the committee has previously
reported.1 You characterize the costs for the making and
hosting of these ads as "very minimal."
X-PAC plans to distribute these ads through the
Internet in two ways: downloading from the X-PAC website
(www.x-pac.org) and through electronic mail.
You state that X-PAC will choose the e-mail addresses to
which it will send the ads in several ways. On its website
(http://www.x-pac.orcl), X-PAC currently has a section where
site visitors can subscribe to the X-PAC e-mail lists.
These people have indicated they would like to receive
additional material from X-PAC when it is available. You
state that X-PAC will send its advertisements as e-mail
attachments to these addresses. You further explain that
there are various bulletin boards that discuss politics on
the Internet. Examples include Usenet newsgroups such as
"altpolitcs." Using these groups, X-PAC would not actually
send the advertisement file content to the newsgroup, but
would instead post a text message describing the
advertisement with a link back to the advertisement hosted
on the X-PAC web site. As resources permit, X-PAC will also
promote its website through traditional paid print media and
on the Internet, with banner advertisements that will link
back to X-PAC's web page.
A large part of this venture will be to encourage the
viewers of these advertisements to forward them to others
through their own e-mail accounts and with a "send this ad
to a friend" link on the X-PAC website. You explain that
while these files can be accessed via the X-PAC website,
they also can be viewed "independently of the Internet."
Users will create a copy of the communication on to their
own computers, and would then use their own e-mail accounts
to forward it to others.
You ask several questions about the described proposal:
1. Considering the minimal costs involved in the making
and hosting of these ads, what does the Commission need to
see in terms of financial documentation?
2. Is it sufficient to report the cost of the
advertisement once as an independent expenditure made by X-
PAC, or does X-PAC have to multiply that cost by the number
of times the advertisement was downloaded from the web site?
3. Does each e-mail X-PAC sends with one of the described
advertisements need to be reported as a separate independent
expenditure?
4. As X-PAC will be encouraging others, via its "send this
ad to a friend" link on the X-PAC website, to forward these
ads, what type of information does X-PAC need to collect
from those who want to forward the ads and about the
intended recipients?
5. Will X-PAC need to take any steps to stop non-U.S.
citizens from forwarding these ads?
ACT AND COMMISSION REGULATIONS
The definition of "expenditure" in 2 U.S.C. 431(9)
includes "any purchase, payment, distribution, loan,
advance, deposit, or gift of money or anything of value,
made by any person for the purpose of influencing any
election for" Federal office. See also
11 CFR 100.8(a)(1). The definition of "contribution" in 2
U.S.C. 431(8) includes "any gift, subscription, loan,
advance, deposit, or gift of money or anything of value,
made by any person for the purpose of influencing any
election for" Federal office. See also
11 CFR 100.7(a)(1). An independent expenditure is defined
at 11 CFR 100.16 as an expenditure for a communication by a
person expressly advocating the election or defeat of a
clearly identified candidate which is made without
cooperation or consultation with any candidate, or any
authorized committee or agent of such candidate, and which
is not made in concert with, or at the request or suggestion
of, any candidate or any authorized committee or agent of
such candidate. See also 2 U.S.C. 431(17) and 11 CFR
109.1(a). An expenditure which does not meet the above
standard is considered an in-kind contribution. 11 CFR
109.1(c).
Under 11 CFR 104.3(b)(3)(viii) and 104.4(a) political
committees (those not authorized by a candidate) are
required to itemize any independent expenditure which by
itself or when added to other independent expenditures made
to the same payee during the same calendar year, exceeds
$200. Independent expenditures are to be itemized on
Schedule E. Independent expenditures of $200 or less to any
one payee do not need to be itemized, though the committee
must report the subtotal of those expenditures on Line(b) of
Schedule E. See 2 U.S.C. 434(b)(6)(B)(iii). Such a
political committee is also required to itemize each payee
to whom it makes an expenditure to meet a committee
operating expense if that payee has received more than $200
in the calendar year from the reporting committee; the
itemized information shall also include the date, amount and
purpose of payment. 2 U.S.C. 434(b)(5)(A); 11 CFR
104.3(b)(3)(i).
Under 11 CFR 106.1(a)(1), expenditures, including
independent expenditures, made on behalf of more than one
clearly identified Federal candidate shall be attributed to
each such candidate according to the benefit reasonably
expected to be derived. However, expenditures for rent,
personnel, overhead, general administrative, fund-raising,
and other day-to-day costs of political committees need not
be attributed to individual candidates, unless these
expenditures are made on behalf of a clearly identified
candidate and the expenditure can be directly attributed to
that candidate.
11 CFR 106.1(c)(1).
Whenever any person makes an expenditure to finance
communications expressly advocating the election or defeat
of a clearly identified candidate or those that solicit any
contribution, and does so through various types of mass
media (e.g., a broadcasting station) or via "any other type
of general public political advertising," the communication
is required to include a statement of sponsorship or
disclaimer. 2 U.S.C 441d; 11 CFR 110.11. The disclaimer
must clearly state if the communication has been paid for
and authorized by a candidate, or the candidate's authorized
political committee. If the communication is not authorized
by a candidate (including an authorized political committee
of a candidate or its agents), the disclaimer shall clearly
state the name of the person who paid for the communication
and state that it is not authorized by any candidate or the
candidate's committee. 2 U.S.C 441d; see 11 CFR 109.3,
110.11(a)(1). Whenever a political committee (not
authorized by a candidate) makes a contribution solicitation
through any form of general public political advertising,
the solicitation shall clearly state the full name of the
committee (or other person) who paid for such communication.
11 CFR 110.11(a)(1)(iv).
The Act and Commission regulations prohibit a foreign
national from making a contribution, directly or through any
other person in connection with an election to any political
office. 2 U.S.C. 441e(a); 11 CFR 110.4(a).2 The
regulations further provide that this prohibition extends to
any expenditure by a foreign national in any United States
election. 11 CFR 110.4(a)(1).
APPLICATION TO PROPOSAL
Reporting requirements of expenditure program
Your first three questions relate to the reporting
requirements that apply to X-PAC in conducting its
independent expenditure program. The last two questions
pertain to the possible obligations of X-PAC with respect to
others who may join in its program.
Question one relates to the "financial documentation"
for the expenditure program in view of its "minimal costs."
In Advisory Opinion 1998-22, the Commission delineated
certain expenses which might need to be accounted for in
assessing the value of a web site which expressly advocated
the election of a candidate and which was created by an
individual using equipment and facilities partly owned by an
unincorporated business. However, since X-PAC is a
political committee, rather than an individual who is making
independent expenditures, its situation differs
significantly from that of the requester in Advisory Opinion
1998-22. The expenses presented in your factual situation
would appear to come within the category of overhead
expenses which are required to be reported as operating
expenses by the committee. This would include expenses for
registering and maintaining X-PAC's domain name (x-pac.org)
and the website hosting, as well as any costs relating to
the purchase and use of computer hardware and software. As
overhead, under 11 CFR 106.1(c)(1), X-PAC would not be
obligated to report these expenses as part of its
independent expenditures, unless they are directly
attributed to a particular communication that expressly
advocates the election or defeat of a clearly identified
candidate.3 Therefore, the Commission acknowledges that the
committee may, in fact, have no costs that must be
attributed to its independent expenditure program and
reported as such under the regulations.
In the event that X-PAC has such expenses, as a
political committee, rather than an individual, X-PAC would
be required to report them as costs of producing or
distributing a communication that represents its independent
expenditure activity. In addition, if such expenses exceed
$200 during a calendar year, X-PAC must itemize them and
provide the requisite certifications of independence. 2
U.S.C. 434(b)(6)(B)(iii),
11 CFR 104.3(b)(3)(vii)(B).
In response to your second and third questions, any
downloading of X-PAC's political advertisements (with
content expressly advocating the election or defeat of a
clearly identified candidate for Federal office) would not
impose reporting obligations on X-PAC since it has no costs
or expenses that are directly attributable to downloading by
others. However, X-PAC's initial distribution of such
advertisements as attachments to e-mail messages that it
sends, or as text (or graphic) content of the e-mail itself,
would be X-PAC's own communications. Accordingly, they
would represent X-PAC's independent expenditures with
concomitant reporting obligations if the costs exceed the
$200 calendar year threshold described above.
In addition, X-PAC's e-mails with express advocacy or
contribution solicitation content would require the
appropriate disclaimer statement under the Act and
Commission regulations. 2 U.S.C. 441d; 11 CFR
110.11(a)(1)(iii) & (a)(1)(iv). The disclaimer requirements
apply even if X-PAC's expenses do not exceed the $200
aggregate because the cited provisions mention "an
expenditure" for a covered communication without regard to
any dollar amount of such expenditure. The Commission
notes, however, that the cited regulations have a definition
of "direct mailing" for purposes of the disclaimer rules:
"direct mailing includes any number of substantially similar
[in content] pieces of mail but does not include a mailing
of one hundred pieces or less by any person." Therefore,
although primarily intended to apply with respect to paper
document mailings, the Commission concludes that this
regulation can be applied to e-mails sent by X-PAC in the
following respect. If within calendar year 2000, X-PAC
sends e-mails to no more than 100 separate e-mail addresses,
and the e-mails have substantially similar content, in
either the message text or in any attachments thereto, then
the disclaimer requirements discussed herein will not apply
to such activity. In contrast, X-PAC e-mails sent in the
current calendar year to more than 100 e-mail addresses and
with substantially similar content (which includes a covered
express advocacy or contribution solicitation message) will
require that an appropriate disclaimer be presented in a
"clear and conspicuous manner" to give adequate notice to
the viewer or reader. 11 CFR 110.11(a)(5).
Informational requirements
Your fourth and fifth questions involve the type of
information that X-PAC would be required either to collect
or provide regarding its expenditure program. You ask
whether X-PAC would be required to collect information from
individuals who want to use these ads for their own Internet
political activity. The Act and Commission regulations do
not require that a political committee or individual making
independent expenditures collect information from others who
might replicate or utilize that committee's or person's
political message even if they do so at the committee's (or
individual's) behest.4
Your last question concerns the actions that X-PAC may
be required to take regarding the possible use of the
express advocacy communications that it sends via e-mails
which may be received by foreign nationals. The Commission
notes that section 441e does not prohibit the distribution
of messages that expressly advocate the election or defeat
of a clearly identifiable Federal candidate to a list of
recipients that may include foreign nationals. Therefore,
the committee would not be required to take any actions
regarding the manner in which its election advocacy
materials may be used.5 You have not indicated that X-PAC's
e-mails would also solicit contributions to Federal, State
or local candidates or to X-PAC itself, although the
committee's web site does include a contribution
solicitation message. The Commission notes that section
441e prohibits the solicitation by any person of political
contributions from a foreign national.6
This response constitutes an advisory opinion
concerning the application of the Act, or regulations
prescribed by the Commission, to the specific transaction or
activity set forth in your request. See 2 U.S.C. 437f.
Sincerely,
(signed)
Darryl R. Wold
Chairman
Enclosures (AOs 1999-22, 1999-17, 1999-9, 1998-22, and 1995-
9)
_______________________________
1 These communications will be in executable programs for
Microsoft Windows operating systems (.exe) and Real Media
files (.ra, .rm, .ram), a proprietary digital media format
by Real Networks. The two main software packages used, you
state, are "Flash 4" by Macromedia and "Real Converter" by
Real Networks. You also state that X-PAC previously
reported the expenditures for its domain name (x-pac.org)
and for its website hosting.
2 Unlike most of the other provisions of the Act, section
441e applies to any election for any political office,
including state and local offices. United States v.
Kanchanalak, 192 F.3d 1037 (D.C. Cir. 1999) [concluding that
Commission interpretations of 2 U.S.C. 441e in both its
regulations and an advisory opinion have "consistently
interpreted 441e as applicable to federal, state, and local
elections since 1976."]
3 An example where this might be the case is if X-PAC
maintained separate web sites supporting or opposing
specific individual candidates. The separate costs to
register and maintain the domain name for such a site could
be directly related to a candidate.
4 In Advisory Opinions 1995-9, 1999-9, and 1999-22 the
Commission examined the obligation of committees or their
vendors to collect information from the committees'
contributors who made contributions through the Internet.
These opinions did not suggest similar requirements for
those making independent expenditures. Furthermore in
Advisory Opinion 1999-17, the authorized committee of a
Federal candidate inquired as to its obligation to determine
the existence of (and monitor), the web sites of other
committees that were independently supporting that Federal
candidate or opposing other candidates seeking the same
office. The Commission determined there was not such an
obligation.
5 The Act requires the Commission to respond to "a complete
written [advisory opinion] request concerning the
application of this Act . . . or a rule or regulation
prescribed by the Commission with respect to a specific
transaction or activity by the person." 2 U.S.C.
437f(a)(1). For this reason, any further comment on the
activity of third parties would not be an appropriate
subject for this advisory opinion. See Advisory Opinion
1999-17.
6 In Advisory Opinion 1995-9, the Commission reviewed a
political committee's contribution solicitation message that
would appear on its web site and advised that the message
should be more explicit with respect to restating the
prohibitions of section 441e. See also Advisory Opinions
1999-9 and 1999-22 (dealing with similar language used by
Presidential campaign committees).