Under orders from a federal court to reconsider its exemption of Internet communications from campaign finance regulations, the Federal Election Commission (FEC) proposed new rules on March 24, seeking public comment on a variety of issues. The proposed rules, which provide more questions than answers, were preceded by an outcry from bloggers, members of Congress and others concerned about possible over-regulation of Internet political activity. Comments are due in late May and a public hearing will be held in later June. The proposed rules take a generally limited approach to FEC regulation of Internet communications. The primary provisions include:

• Treatment of campaign ads on the Internet under the same rules as off line ads, which would require they be paid for with funds subject to contribution limits.
• Possible simplified disclosure rules for regulated Internet political communications.
• No disclosure by bloggers paid by candidates or campaigns (although the FEC asks for further comment on whether such payments should be disclosed).
• Links to candidate sites and re-publication of campaign materials through websites or e-mail would only be a regulated contribution if paid for.
• Extension of the media exemption to online journals, but the FEC asks whether it this should only apply to publications that also appear offline.
• Exemption for individual volunteers if using a personal computer, or one available at a public site, such as a library or Internet café. Isolated, incidental or occasional use of computers by individuals at their place of work would be permissible if it did not exceed one hour per week.
• Disclaimers stating the funding source for unsolicited e-mail to more than 500 recipients that solicit contributions or expressly advocate election or defeat of a federal candidate if the e-mail addresses are purchased.

The proposed rule was preceded by widespread alarm among bloggers and others after a March 3 C/Net News.Com interview quoted FEC Commissioner Bradley Smith as saying, "I think grassroots Internet activity is in danger." Concern increased after FEC Chairman Scott Thomas gave a speech at the Politics Online conference on March 11 that warned of possible "massive evasions of the prohibitions on party soft money and corporate and union resources in federal elections" if the new regulations are "done sloppily." Since corporate contributions to campaigns are already prohibited by campaign finance law, the point of further Internet regulation was not clear. Thomas also raised the possibility of bloggers becoming regulated political committees if their major purpose is to influence federal elections, and noted that many Internet-based services could be exempt as media communications. That same day the Online Coalition sent a letter to Thomas expressing concern about the potential impact the rulemaking could have on Internet based political speech. The bipartisan coalition, whose tagline reads "from left to right, preserve our rights", said, "The Internet is a fundamental tool in the American political process. Just this week, we learned that 75 million Americans used the Internet to gather news, read commentary, discuss issues, register to vote, and generally join in the democratic process during the last election cycle. We believe the Internet is the primary driving force behind the increased participation among traditionally under-represented groups of voters ...." The letter also expressed concern that the FEC's media exemption may not provide sufficient protection to bloggers and asked that the definition of prohibited coordination with campaigns be clarified. It has nearly 3,000 signatories. Members of Congress also joined the public discussion prior to publication of the draft rule. On March 17, Senate Minority Leader Harry Reid (D-NV) introduced S. 678, a bill that would exempt Internet communications from FEC regulation. Reid also sent a letter to Thomas saying, "Congress did not intend to regulate this new and growing medium in the Bipartisan Campaign Reform Act (BCRA) .... Regulation of the Internet at this time, with its blogs and other novel features, would blunt its tremendous potential, discourage broad political involvement in our nation and diminish our representative democracy." On March 11, Rep. John Conyers (D-MI), ranking minority member of the House Judiciary Committee, and 13 other representatives sent a letter to the FEC urging caution, saying the FEC should "make explicit in this rule that a blog would not be subject to disclosure requirements, campaign finance limitations or other regulations simply because it contains political commentary or includes links to a candidate or political party website, provided that the candidate or political party did not compensate the blog for such linking." Public statements by the FEC commissioners, as well as the many questions posed in the proposed rule, makes it clear no decisions about the final approach to Internet regulation have been made. Among the many difficult issues to be debated is whether bloggers that are paid to post statements that support or attack candidates should disclose the payment. On March 4, the New York Times reported that in the 2004 South Dakota Senate campaign two bloggers were paid $27,000 and $8,000 by the ultimate winner, Sen. John Thune (R-SD), to post information attacking then Sen. Tom Daschle. There were also reports that the Howard Dean campaign paid $12,000 to bloggers during the Democratic primaries.