Federal political committees (candidates, PACs, and federal, state, and local political party committees) may spend any amount of money on advertising for federal candidates provided that the money is raised in limited amounts and from legal donors (not corporations, labor unions or foreign nationals). That means that no party money can come from general corporate and union treasuries and that only a limited amount can come from a single political committee or from a single individual in a single election cycle. Individuals may spend an unlimited amount of their own funds on advertising for federal candidates, provided the spending is disclosed. (Click here for extended discussion on individual limits and the associated disclosure requirements.)

The more interesting and pressing questions are: who else may fund advertising in federal elections and what must they disclose to the FEC about their activities? Two separate sets of regulations—express advocacy and electioneering communications—apply here.

Express advocacy grew out of the post-Watergate amendments to FECA. On their face, these provisions were broad—one provision restricted expenditures "relative to a clearly identified candidate" and another required disclosure of expenditures used "for the purpose of…influencing" a federal election.

In Buckley v. Valeo, however, the Supreme Court found the phrases "relative to" and "for the purpose of … influencing" unconstitutionally vague and so rewrote the statute in order to "save" it. The Court interpreted the term expenditure to be limited to communications that included explicit words advocating the election or defeat of a candidate. And the Court provided examples of such words of express advocacy, like "vote for," "elect," "support," "defeat," and "reject"—which came to be known as "magic words." Unless an advertisement contained such words or used phrases with a similar, unmistakable meaning, it would not be considered express advocacy but instead would comprise issue advocacy. Any money spent on issue advocacy would not constitute an expenditure that required disclosure or was possibly prohibited under federal law. [(Click here to read an example from the NRA on the exploited distinction between express and issue advocacy in campaigns.:ch3.NRA)]

Between 1976 and 2002, this distinction between express and issue advocacy had two primary consequences. First, since the law barred corporations and unions from making any expenditures at all, they could not spend money from their general treasuries for express advocacy. They could, however, spend unlimited amounts on issue advocacy since the money required for it did not count as an expenditure. In other words, although they could not directly fund any advertising containing what came to be called "magic words," they could fund as much advertising as they wanted that did not meet the express advocacy test. Individuals, by contrast, could spend unlimited amounts on either type of advocacy. Second, since federal law required FEC disclosure of permitted expenditures above a certain amount but required no disclosure of spending that did not constitute expenditures (or direct contributions), neither individuals, corporations, nor unions had to disclose any spending on issue advocacy. Thus, corporations, unions, and individuals could spend unlimited amounts on "issue advertising" in the midst of federal elections, referring to federal candidates, without having to disclose what they were doing. Their advertising would escape federal regulation entirely.

The result was predictable. Corporations, unions, and individuals largely evaded limits and disclosure by simply avoiding the use of magic words. They engaged robustly in election-influencing advocacy while avoiding express advocacy. As many, including the Supreme Court in McConnell, noted, however, issue ads featuring candidates became the functional equivalent of express advocacy. They had the same political effect.

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The FEC wrote a definition of express advocacy into its regulations in 1995 which attempted to include both magic words (part one of the regulation) and a broader "facts and circumstances" test (part two). Part two stated that a communication was express advocacy if:

When taken as a whole and with limited reference to external events, such as the proximity to the election, [it] could only be interpreted by a reasonable person as containing advocacy of the election or defeat of one or more clearly identified candidate(s) because—

(1) The electoral portion of the communication is unmistakable, unambiguous, and suggestive of only one meaning; and

(2) Reasonable minds could not differ as to whether it encourages actions to elect or defeat one or more clearly identified candidate(s) or encourages some other kind of action.

Legal opinion concerning this regulation was mixed. Although two circuit courts held that it was unconstitutional because it impermissibly expanded express advocacy beyond magic words, the FEC initially maintained that it would enforce this standard in all other circuits. A change in FEC Commissioners then led to a de facto stay in the Commission's use of part two of the regulation pending a Supreme Court ruling on express advocacy. Now that the Court has ruled in McConnell that "magic words" is not a constitutionally-mandated standard, it is unclear whether the FEC will again seek to apply part two, which remains on the books.

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The Bipartisan Campaign Reform Act of 2002 (BCRA) addressed the problem posed by corporate and labor funded issue advocacy advertising by establishing an additional bright-line test to identify a new class of political communications subject to federal regulation, which it called electioneering communications. Its definition covers only: (1) broadcast, cable, and satellite communications; (2) that clearly identify a candidate for federal office; (3) are aired within 60 days before a general or 30 days before a primary election; and (4) can be received by 50,000 or more people in the jurisdiction the candidate seeks to represent. BCRA then applies this definition in two different ways. First, it requires disclosure of disbursements for any electioneering communications made by an individual or group totaling more than $10,000 in a calendar year. Second, it bars business corporations and unions, as well as any non-profit organization that receives any money from business corporations and unions, from spending any general treasury funds on electioneering communications. [(Click here for a case study on comparing express advocacy and electioneering communications standards.:ch3.2)]

The Supreme Court, in deciding the constitutional challenge to BCRA in the McConnell case, stated that the express advocacy standard was not required by the Constitution and upheld the new bright-line test for electioneering communications. The Court said that the express advo cacy test centered on the existence or absence of the magic words, an exercise that had proved irrelevant to identifying political advertising subject to disclosure and funding rules. The magic words test, it thought, did not aid the "legislative effort to combat real or apparent corruption," and the Court recognized that BCRA was a legitimate effort to "correct the [test's] flaws." [3] (See Checklist for Electioneering Communications.)

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As a result of years of congressional legislation and court decisions, there are now two regimes regulating the source and disclosure of federal political advertising. Under the old express advocacy regime, money spent on any advertisement featuring a clearly identified candidate for federal office that employs express advocacy—no matter how long before an election it appears, no matter what media it appears in, and no matter which jurisdiction, if any, it targets—counts as an expenditure. That means that corporations and unions cannot spend any money from their general treasuries on these communications and that individuals, although they can spend unlimited amounts, must report any expenditure over $250 to the FEC.

As noted above, whether the FEC will continue to attempt to use only magic words to define express advocacy (despite the Supreme Court's rejection of that concept both as a constitutional and practical matter in McConnell) or will utilize the broader "reasonable person" standard of part two of its regulation to identify express advocacy is unclear at this time.

Under the new electioneering communications regime, money spent on advertisements aired within 60 days before a general or 30 days before a primary or special election, featuring a clearly identified candidate for federal office, appearing on a broadcast, cable, or satellite medium, and targeting the candidate's constituency also effectively counts as an expenditure. Again, that means that corporations and unions cannot spend any money from their general treasuries on such ads and that individuals, although they can spend unlimited amounts, must disclose all expenditures over an aggregate of $10,000 to the FEC. Because the magic words that define express advocacy are so easy to avoid, however, the new electioneering communications regime effectively does most of the heavy lifting with respect to the regulation of political advertising.

The timeline shows the reach of these two different regimes. Since express advocacy depends only on the words used, not at all on when the ad appears, federal candidate advertisements are always subject to it, although few, of course, will be run long before an election. Since electioneering communications have a temporal element as part of their definition, BCRA's new requirements kick in only during certain parts of the electoral cycle.

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