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1 (March 23, 2006)

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                                                               Order Code RS22272
                                                            Updated March 23, 2006



 CRS Report for Congress

              Received through the CRS Web




     Campaign Finance Reform: Regulating
     Political Communications on the Internet


                           L. Paige Whitaker
                           Legislative Attorney
                         American Law Division

                            Joseph E. Cantor
              Specialist in American National Government
                   Government and Finance Division

Summary


     The Bipartisan Campaign Reform Act of 2002 (BCRA) amended the Federal
 Election Campaign Act (FECA) to include a new term, federal election activity, in
 order to expand the scope of federal campaign finance regulation. The definition of
 federal election activity includes a public communication (i.e., a broadcast, cable,
 satellite, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone
 bank communication made to the general public) or any other form of general public
 political advertising. In October 2002, the Federal Election Commission (FEC)
 promulgated regulations exempting from the definition of public communication those
 communications that are made over the Internet. In response to the FEC' s final rules,
 the two primary House sponsors of BCRA filed suit in U.S. district court against the
 FEC seeking to invalidate the regulations as opening a new avenue for circumvention
 of federal campaign finance law. In September 2004, in Shays v. FEC, the U.S. District
 Court for the District of Columbia overturned some of the FEC's new regulations. In
 response to the district court's decision, in April 2005, the FEC published proposed new
 rules to conform to the Shays ruling. The proposed regulations reflect an attempt by the
 FEC to leave Web logs, or blogs, created and wholly maintained by individuals, free
 of regulations under FECA, while extending limited regulation only to uses of the
 Internet involving substantial monetary transactions. On November 2,2005, the House
 failed to approve H.R. 1606 (Hensarling), brought up under suspension of the rules, to
 exempt Internet communications from regulation under federal campaign finance laws.
 The bill was brought up again and ordered reported favorably by the House
 Administration Committee on March 9, 2006, setting up consideration by the House.
 The same measure was offered in the Senate, as amendment 2955 (Frist) to S. 2349
 (Lott), the Legislative Transparency and Accountability Act of 2006.


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