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Listeners Are Entitled to Know by Whom They Are Being Persuaded

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Updating Sponsorship Identification Regulations Under Section 317 of the Communications Act

The growth of the Internet notwithstanding, television advertising continues to be the dominant means used during U.S. political campaigns to communicate with voters -- the "nuclear weapon" of campaigns as Obama advisor David Axelrod once described it.

In 2012, about $6 billion was spent on television ads in all U.S. political races. For the presidential race alone, there were more than 3 million broadcast and national cable ads run in 2012 at a cost of about $2 billion, according to the Wesleyan Media Project. Compared to 2008, the previous presidential year, ad volume went up by 33 percent, and ad spending went up by 81 percent. Notably, during the months of presidential general election contest, the vast majority of the ads ran in just 71 of the nation's 210 media markets.

Much of this increase in television advertising was fueled by the Citizens United decision that erased the ban on direct corporate spending in elections. In 2012, spending by non-candidate outside groups exploded, with television serving as the tool of choice for outside groups, including Super PACs and so-called "dark money groups." Outside groups spent more than $1 billion in the presidential race, and accounted for a strong plurality of TV ad spending by one side or both in five competitive Senate races: Missouri, Montana, North Dakota, Nebraska and Wisconsin, according to Cook Political Report and the Campaign Media Analysis Group of Kantar Media. Outside groups also accounted for at least 50 percent of the TV ad spending by one side or both in three 2012 Senate races, including the race in Indiana, Ohio and Wisconsin.

For the millions of American viewers who saw these ads in 2012, many may or may not have known who was behind them, depending on whether the ad was run by a candidate or party or by an outside group.

Under current federal law, candidates are required to take personal responsibility for the ads they run on TV and radio under the "Stand By Your Ad" statute passed in 2002 as part of the Bipartisan Campaign Reform Act (BCRA). This statute requires candidates to include in their political advertisements an on-air statement and visual disclaimer that the candidate has approved the communication. Failure to include such a statement can result in penalties from the Federal Election Commission (FEC), loss of the special "lowest unit rate" for candidates and rejection of the ad by the TV station. As for outside groups that run either "express advocacy" advertisements or "electioneering communications" (defined as TV or radio ad which refers to a candidate running shortly before an election targeted to the relevant electorate), current law requires them to report this spending to the FEC.

While the statute explicitly requires disclosure of those funding the "electioneering communications," this requirement was eviscerated by the FEC. The highly polarized agency adopted a bizarre interpretation of the statute, requiring disclosure only of those contributions explicitly "earmarked" for a specific ad. This Alice-in-Wonderland interpretation that permits easy evasion of the disclosure requirement is currently being challenged in the courts.

Also, TV ads that run outside this "window of time" near an election (30 days for a primary, 60 days for a general election) are excluded altogether if they are not express advocacy, as are ads that do not mention a clearly identified federal candidate. A recent review by the Sunlight Foundation of a 200 randomly selected contracts in broadcasters' political files found that of the 94 ads that targeted federal candidates, only 8 actually listed the name of the candidate targeted in the paperwork they filed with the station. More than 50 left out the information and more than 20 had no disclosure forms at all. A number of outside groups running political advertisements also often failed to provide the information that the statute requires.

These requirements for federal elections are in addition to the long-standing statutory obligations of broadcasters under Section 317 of the Communications Act to disclose "if matter has been aired in exchange for money" and to air such an announcement when the ad is broadcast. The Federal Communications Commission (FCC), which enforces the Communications Act, administers the sponsorship identification requirements and its 1944 rules implementing sponsorship identification requirements both commercial and political advertising remain largely unchanged. These requirements state that political ads must "fully and fairly disclose the true identity of the person or persons, or corporation, committee, association or other unincorporated group, or other entity" paying for the ads, and obligates the stations to put the information in the station's publicly accessible political file. A political ad is described as ad that "communicates a message relating to any political matters of national importance" or includes a "discussion of a controversial issue of public importance."

In 1975, according to the Government Accountability Office (GAO), the FCC "clarified the meaning of its 1944 requirements for full and fair disclosure of the identity of the sponsor, modifying its regulations to make clear that broadcasters and cablecasters are expected to look beyond the immediate source of payment where they have reason to know (or could have known through the exercise of reasonable diligence) that the purchase of the advertisement is acting as an agent for another, and to identify the true sponsor."

These requirements rest on the basic principle that "Listeners are entitled to know by whom they are being persuaded."

The effectiveness of these requirements, however, has been undercut in application. A 1979 unpublished decision by the FCC staff found that a broadcaster could be considered reasonably diligent in fulfilling its duty to find the true sponsors of a political ad if the "named organization claimed it had editorial control, regardless of the sources of its funds." Of course, broadcasters have no way to determine who is exercising editorial control, nor can anyone else.

As a result, current, application of the sponsorship identification rules looks like this in real life: TV stations ask the advertiser's buying agent to fill out a sponsorship identification form (often modeled on a form developed by the National Broadcasters Association) which has boxes for the name of the sponsor's chief executive officers or a list of its executive committee or directors or for the buyer's agent (though this latter person is not listed anywhere in the statute or regulation). The form is then placed in the broadcasting station's public file.

The problem is that current sponsorship identification rules are obsolete. They fail to provide effective disclosure in the case of non-candidate political advertisements. While candidate ads are required to provide contemporaneous and accurate information to the viewer about whom is responsible for the ad, ads run by outside groups use current rules to evade providing information that is most relevant to viewers.

With outside group advertising having exploded after the Citizens United decision, the shortcomings of the current FCC rules became starkly clear. Viewers are getting neither timely nor adequate information to help them determine by whom they are being persuaded.

Before Citizens United, the leading non-candidate political advertisers were groups like the U.S. Chamber of Commerce and labor unions -- entities well known to most voters. An ad that had a disclaimer stating "Paid for by the AFL-CIO" or "Paid for by the U.S. Chamber of Commerce" provided most viewers with enough information to assess their view of the messages contained in the ad.

In 2012, however, many of the expanding number of outside groups used innocuous names that meant nothing or conveyed no obvious "identity" to viewers. In too many instances, the names of the groups are opaque and do no give an average viewer meaningful information about the true identity of the source of the ads or the groups act as "front groups" and hide the "true identity" of the real source of funding for the ads.

Here are some examples:

American Action Network

60 Plus Association

Americans for Tax Reform

Americans for Prosperity

American Future Fund

Vote Your Values

Let Freedom Ring

American Bridge 21st Century

The trend continued in 2013 as Independence USA PAC, a Super PAC, flooded the televisions of viewers in Northern Virginia this past fall with more than $1 million worth of ads attacking Republican Gubernatorial nominee Ken Cuccinelli on his stance on guns. With a tag line stating, "Independence USA PAC sponsored this ad," it is doubtful that viewers had any clue as to the "true identity" of the sponsor of the ad, which was New York City Mayor Michael Bloomberg who almost single-handedly funds the Super PAC. It is fair to ask how viewers in Virginia would have assessed the message of the ad if, at the end, Mr. Bloomberg was identified on screen as the funder of Independence USA PAC.

It is important for voters to know who is paying for the ads bombarding them because voters will find some sources more "trustworthy" than others. Viewers have different views about the reliability of an ad depending on who paid for it. Ads about cigarette taxes are likely to be seen as more or less reliable if one knows tobacco companies or anti-smoking groups paid them for.

It is no surprise that the GAO, in its 2013 report, "Broadcast and Cable Television: Requirements for Identifying Sponsored Programming Should Be Clarified," noted that "FCC guidance for the sponsorship identification requirements have not been updated in nearly 50 years to address more modern technologies and applications."

Regulations to make clear who is paying for a TV advertisement remain caught in a time warp. While candidates have to personally state that they approved the message in the ad, outside groups that spent millions on political ads reveal nothing about their donors.

Efforts to update the regulations implementing the statutory sponsorship identification requirements are being fought by Republicans on Capitol Hill. Senator Ted Cruz (R-TX) who placed a hold on the confirmation of the new FCC Chair Tom Wheeler until he received sufficient assurances regarding FCC action on disclosure is leading the opposition.

In releasing the hold, Sen. Cruz characterized the assurances he received from the soon-to-be Chairman this way: "Mr. Wheeler stated that he had heard the unambiguous message that trying to impose the requirements of the Disclose Act, absent Congressional action, would imperil the Commission's vital statutory responsibilities, and he explicitly stated that doing so was 'not a priority.'"

While Hill opponents continue to harden their opposition to any FCC action in this matter, the record shows they do not have the courts on their side. The Supreme Court has consistently found that voters deserve to know who is funding political communications in order to evaluate the full context of the message.

In the controversial Citizens United decision, the Supreme Court upheld the disclosure requirements by an eight-to-one margin. Justice Kennedy said from the bench:

"We reject Citizens United's challenge to the disclaimer and disclosure provisions. Those mechanisms provide information to the electorate. The resulting transparency enables the electorate to make informed decisions and give proper weight to different speakers and different messages."

Justice Kennedy stated that disclosure provides "the electorate with information," makes sure "that voters are fully informed about the person or group who is speaking," and ensures people are "able to evaluable the arguments to which they are being subjected, and that with disclosure, "citizens can see whether elected officials are 'in the pocket' of so-called moneyed interests."

He presumed that disclosure would serve as a check on potential misuse of independent expenditures, saying, "[I]f elected officials succumb to improper influences from independent expenditures; if they surrender their best judgment; and if they put expediency before principle, then surely there is cause for concern."

In a case decided shortly after Citizens United, conservative Justice Antonin Scalia also made a forceful defense of election-related disclosure last year. In a concurring opinion in Doe v. Reed, which upheld disclosure requirements for petition signers for ballot measures, Justice Scalia wrote: "Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed."

The Courts have consistently made clear that meaningful disclosure of the money in politics provides voters with information that is critical to holding representatives accountable through elections. Justice Stephen Breyer, writing in the 2003 opinion on the Bipartisan Campaign Reform Act about the required public disclosure of additional information about political ad spending, said, "Recordkeeping can help both the regulatory agencies and the public evaluate broadcasting fairness, and determine the amount of money that individuals or groups, supporters or opponents, intend to spend to help elect a particular candidate."

In order to make that accountability meaningful, voters need to know if their elected officials will answer to them or to corporations, unions and wealthy donors who pay for the advertisements that flood the airways. When special interest groups can spend large amounts of money while hidden in the shadows, it becomes easier for them to threaten political retribution to lawmakers who don't vote their way. Stronger disclosure helps ensure that voters have all of the facts when they go to the polls so they can make up their own minds.

The Court has also held that there is no right to anonymous speech when an organization is trying to influence the outcome of a candidate's election. The Supreme Court has explicitly rejected "[t]he existence of a generalized right of anonymity in speech." And in City of Ladue v. Gilleo Justice Stevens wrote for the Court, "[T]he identity of the speaker is an important component of many attempts to persuade."

In sum, in order for citizens to make informed choices when they go to the polls, they should know who has been trying to persuade them to vote one way or the other.

The torrent of unidentifiable, but generously funded spending on our elections unleashed by Citizens United decision is destined to grow in 2014 and beyond.

The FCC should make clear that for television advertisements, the name and position of any person or entity that financially contributed a significant amount to the production or airing of such advertisements has to be disclosed in the form filed in the station's political file. The FCC should avoid the pitfalls adopted by the FEC and instead ensure that just because funds expended for political ads were not specifically "earmarked" for the purpose of funding political advertising they do not escape disclosure if such funds were used to pay for the advertisements. In addition, the top four donors who contributed for the purpose of funding the political advertisements should be disclosed on-air in a format consistent with current requirements for the amount of time and placement. And to give teeth to these requirements, the Commission should require broadcasters to obtain sworn statements from political advertisers, subject to penalties of perjury, as to their sources of funding and place them in the station's public file.

The purpose of these requirements is not duplicative of the FEC, nor are they intended to replace long-delayed congressional action on new laws to respond to the new world order imposed by the Citizens United decision. While there is certainly value at being able to use TV station's political files to assess how much is being spent and by whom in a race, the FCC's responsibility -- and the TV stations' responsibility -- is to inform the viewer who is speaking.

The FCC is well within its current statutory authority to update its sponsorship identification regulations. Threats from Senator Cruz and his allies notwithstanding, the FCC should take action to ensure voters have the information they need to make an informed choice in the voting booth.