But Of Course We Talk to Them

Innocent Steps That Can Land You In a Coordination Investigation

By: Gregg Skall, Larry Norton and Jim Kahl
The Political Law Team
Womble Carlyle Sandridge & Rice, PLLC
www.wcsr.com/political

As we head into the final weeks of the general election, we can expect to see the kind of increased spending on political advertising that comes from coordinated communications that are partly paid for by the candidate's committee and partly paid by an advocacy group.

Is it legal to take this money? Are there special legal requirements imposed in their tags and disclaimers?

Federal law and regulations have long prevented campaigns and parties from evading contribution limits by having others who support the candidate's or party's cause pay for campaign activity directly -- for instance, paying for a television or radio ad crafted by the campaign. Despite the coordination that might occur with the campaign, it is important for the broadcaster to remember that Lowest Unit Charge is only available to the candidate or the candidate's authorized committee for its own authorized communications.

But there are other concerns, too. FEC investigations focusing on this "coordination" prohibition are typically lengthy and intrusive. As intermediary service providers, radio and television stations, as well as media producers and buyers, do not face liability when coordination occurs, but they should understand the rules in this area or risk being drawn into these investigations through subpoenas and depositions.

Despite several attempts to develop workable rules, the FEC has been tied in knots for years trying to implement this "coordination" prohibition. In June of this year, a federal appellate court in the District of Columbia tossed out parts of the latest FEC coordination rules, while upholding a new rule that allows media buyers and producers, as well as other consultants, to establish "firewalls," permitting them to work simultaneously for candidates and outside spenders.

Why has it been so difficult to write rules in this area? For one thing, it's in the very nature of campaigns that campaign or party officials interact with donors all the time. How do you craft clear rules that allow for this natural exchange of information, while preventing discussions about advertising content, selection of target audiences, developing voter lists and other matters of campaign strategy?

Second, in many markets there are only a limited number of consulting firms, media buyers and polling groups that specialize in political activity. How do you prevent these consultants from serving as conduits of valuable information between campaigns and third-party spenders without stifling their business or severely limiting their availability?

Third, in politics as in many areas of today's economy, mobility of employees is common. A person may work for a campaign for a while, then work for a party committee, then work for a private consultant. Should a person who is privy to the plans, projects or needs of a candidate or party committee be forever barred from working for an advocacy group that supports the same candidate or party? If not, how do you draw lines in this area?

In 2002, as part of the Bipartisan Campaign Reform Act (known as "BCRA" or the McCain-Feingold law), Congress directed the FEC to scrap its existing coordination rules and adopt new ones. Under the pre-BCRA regulations, the FEC considered whether the candidate engaged in "substantial discussion or negotiation" about radio or TV ads with an outsider resulting in "collaboration or agreement." Anything short of this was permitted. BCRA required the FEC to adopt rules that do not require agreement or formal collaboration to establish coordination.

In response, the FEC adopted a test that expanded the manner in which coordination can occur. Under this test, coordination could be found based on (1) the request or suggestion of the candidate or party; (2) substantial discussions between the person paying for the communication and the candidate or party; or (3) situations where the person paying for the communication hires the candidate's vendor or former employee, allowing for the sharing of information material to the candidate's plan, projects or needs.

But the new rule also created safe harbors designed to allow the FEC to toss certain complaints before even commencing an investigation. One safe harbor provided that ads run more than 90 or 120 days before an election (depending on whether it identifies a House, Senate or Presidential candidate) will not be subject to coordination restrictions so long as the ad does not expressly advocate the election or defeat of a clearly identified candidate. The FEC also allowed for media firms and other consultants to establish a "firewall" to prevent the sharing of information. The firewall must be described in a written policy that is distributed to affected employees, consultants and clients.

The latest chapter unfolded just a couple of months ago. The District of Columbia Court of Appeals struck down the time restrictions, but upheld the firewall provision. The FEC recently declined to appeal.

So the FEC is back to the drawing board yet again. In the meantime, complaints will be filed and investigations launched. There is little reason to expect clarity in this area until well after the 2008 elections. However, for this election it seems that the only defensive move for broadcasters would be to ask for a firewall policy when suspicions are raised that coordination has occurred or that spending is being paid for in combination by the campaign and another group, such as a 527.

Finally, while broadcasters will not face liability for coordination, they still have important interests at stake if the FEC comes seeking documents or testimony as part of an investigation. In particular, there are steps broadcasters can take to limit the scope of the investigation, protect the confidentiality of much of the proprietary information shared with government investigators or lawyers, and, most importantly, minimize disruption to business operations.

This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.