United States: New Campaign Finance Law Poses Challenge for Broadcasters

Originally published 1st Quarter 2004

The Supreme Court’s December 10, 2003 decision to uphold the Bipartisan Campaign Reform Act of 2002 (BCRA) cleared-the-way for the new campaign law’s full implementation for the 2004 federal elections. The Court’s unexpected decision to sustain BCRA’s political advertising provisions in their entirety, only one month before the Iowa Caucuses, left many broadcasters scrambling to understand and comply with the law’s complex – and sometimes inconsistent – requirements. This article briefly discusses the obligations and challenges broadcasters face as they implement the new campaign law for the first time.

BCRA’s sponsorship identification provisions reflect Congress’s desire to hold candidates and third parties accountable for the content of their paid programming and advertisements. Designed to create transparency for voters, Congress’s so called "stand by your ad" provisions also muddied the regulatory waters. Rather than creating a single sponsorship identification requirement applicable to all political advertisers, Congress split jurisdiction over the issue between the Federal Communications Commission (FCC) and the Federal Election Commission (FEC) directing each agency to enforce slightly different sponsorship identification rules.

The FEC’s sponsorship identification requirements, enumerated in Section 441d of the Federal Election Campaign Act, apply to all public communications paid for by political committees, by any person expressly advocating the election or defeat of clearly identified federal candidate and by any person soliciting a contribution for a federal candidate. On the other hand, the FCC’s general sponsorship identification requirements (enacted prior to BCRA) and enumerated in Section 317 of the Communications Act of 1934, apply to all advertisers including candidates. Pursuant to BCRA, the FCC also imposes additional sponsorship identification obligations, codified in Section 315 of the Communications Act of 1934, for federal candidates and their authorized committees seeking to qualify for a broadcaster’s "lowest unit rate" when purchasing air time. Candidates who wish to take advantage of a station’s "lowest unit rate" must certify that their programming or advertisement complies with Section 315’s sponsorship identification mandate.

Stations must comply with the FCC’s sponsorship identification rules and should create guidelines to make political advertisers aware of the FEC’s rules as well. Exactly how the FEC and FCC will ultimately enforce and apply the new law remains an open question. This uncertainty, coupled with the agencies’ overlapping jurisdiction and different sponsorship identification requirements, places a significant burden on broadcasters who often become the de facto arbitrator of disputes between competing political advertisers.

BCRA also created additional public file obligations for broadcasters. The new law requires broadcasters to maintain publicly available records for any paid programming which refers to a legally qualified federal candidate, a federal election or a national legislative issue of public importance. The statute does not, however, define the phrase "national legislative issues of public importance," or provide criteria by which stations can make such a judgment. Nor has the FCC promulgated rules to clarify the term. Would, for example, an advertisement by a national homeowners association opposing the construction of a telecommunications transmission tower in an historic neighborhood concern a local or national legislative issue of public importance? Authority to build the tower is granted by federal law, yet a single transmission tower has a distinctly local impact. How does a broadcaster decide? The FCC may eventually clarify this provision, but as a practical matter it will likely be incumbent upon individual broadcasters, using issue advertiser certification of content subject matter, to make such determinations during the 2004 elections, so that they can appropriately maintain their public political files.

The new law prohibits corporations and labor unions from paying for "electioneering communications" which are broadcast, cable or satellite communications that: (1) refer to a clearly identified federal candidate; (2) are broadcast within 60 days before the general election or within 30 days before the party primary, convention or caucus that nominates the candidate; and (3) are targeted to the "relevant electorate," i.e., over 50,000 persons in the State or Congressional District that the candidate seeks to represent. Authority to enforce this provision is vested in the FEC, but the FCC was directed to create a publicly available database for advertisers to determine if a particular broadcast reaches the "relevant electorate" (the FCC’s Electioneering Communications Database is available on the Internet at http://gullfoss2.fcc.gov/ecd/). For their part, broadcasters must avoid receiving corporate or labor union general advertising funds for electioneering communications (PAC funds are acceptable consideration for such ads) and should be prepared to assist the FEC in investigating non-compliance by issue advertisers.

While broadcasters have specific statutory and regulatory obligations to comply with the FCC’s sponsorship identification and political record keeping provisions, they appear to have no direct liability, beyond licensees’ public interest obligation, with regard to compliance with the FEC’s sponsorship identification and electioneering communications mandates. However, even though the new law creates direct legal liability for broadcast stations only in certain circumstances, practical compliance with all of BCRA’s political advertising mandates may fall squarely on broadcasters as the gatekeepers of the public airwaves. Therefore, a prudent broadcaster would be well versed in BCRA’s provisions, even those for which they do not have direct liability.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.