Friday, August 8, 2008, 5:27 PM

Political GPS: Politics and the Internet: Regulators Struggle to Keep Up

As new technologies transform politics, agency regulators circle warily: they try not to stifle innovation, but are determined to provide rules for it. What is emerging is a scheme of stove-piped regulation – different rules for different media, even when the nature of the activity is exactly the same. And in an environment of rapid technological change, it doesn’t take long for new rules to become obsolete.

Nonetheless, for companies, trade associations, and non-profits, it is important to be aware of developments relating to the use of new media in fundraising, PAC administration, and communicating with employees:
  • On July 28, 2008, the IRS issued a directive explaining that a mere link on the Web site of a charitable organization – a 501(c)(3) - - may constitute prohibited political activity because of information obtained from clicking on the link. The IRS says it will examine “context” to determine whether a charity is steering someone toward information about specific candidates and their positions on specific issues. This includes “electronic proximity,” meaning the number of “clicks” between the objectionable material and the section 501(c)(3)’s website.
  • The FEC has taken more of a hands-off approach, especially regarding an employee’s use of work computers and Internet access. Generally, FEC regulations limit employees to “occasional, isolated, or incidental use” of work facilities in connection with volunteer campaign activity. However, rules adopted in 2006 allow employees to make unlimited use of work computers, at home or in the office, subject to the employer’s rules for personal use of computers and Internet access.
  • While much Internet activity is unregulated by the FEC, restrictions apply to advertising placed on another Web site for a fee and activities coordinated with candidates or political party committees. For instance, an organization may not provide goods or services at no charge (e.g., web video, e-mail list) or a charge that is less than the usual or normal charge for such goods or services (e.g., advertising space). This is an in-kind contribution, subject to federal contribution limits and source prohibitions.
  • Restrictions also exist for online fundraising by corporate or trade association PACs, and for endorsements of federal candidates. Because a PAC may solicit contributions only from its restricted class, access to online solicitations must be limited to the members of that group, either through password protected sites, use of an e-mail listserv, or other means. Corporate and trade association endorsements must be similarly targeted.

Colorado Ballot Initiative on Pay-to-Play?

A proposed ballot initiative known as the Clean Government Initiative would add the State of Colorado to the list of states that restrict campaign contributions from government contractors and their employees. The Colorado proposal appears to have the requisite number of signatures to qualify for the November ballot. If approved by voters, it would bar “no-bid” (also known as “sole source”) government contractors from making a campaign contribution to a candidate for public office or political party during the term of the contract and for two years thereafter. Violators, including owners, officers, and directors of the contractor, would be subject to penalties for violations.

Meanwhile, in Illinois . . .

A pay-to-play bill passed by the Illinois legislature continues to sit on the Governor’s desk. As we reported in the July 2 Political GPS, the Illinois General Assembly sent its version of pay-to-play to Governor Blagojevich on June 30. The law would prohibit companies, their executives, and even family members from making campaign contributions if the company has or seeks government contracts in excess of $50,000. In a recent news report, the Governor suggested he would consider signing the bill if the legislature also passed a jobs bill.

If you have any questions or would like more information, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429) or Jim (JKahl@wcsr.com, (202) 857-4417).

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