The FEC is currently considering alternative drafts of a new Advisory Opinion that asks whether a campaign committee receives a prohibited in-kind contribution if an incorporated television stations charges them the Lowest Unit Charge (“LUC”) for advertising time when the committee is not statutorily “entitled” to the LUC because of failure to comply with the “Stand by your Ad” disclaimer requirements.

We believe believe that this is not a prohibited in-kind contribution, for reasons CCP Chairman Brad Smith expressed while serving as a Commissioner on the FEC.  For those interested in this issue, we offer the text of Commissioner Smith’s dissent in AO 2004-43 (Missouri Broadcasters Association):

[W]hether the candidate ads at issue here satisfied the “stand by your ad” disclaimer requirements is irrelevant because broadcasters have broad statutory discretion to provide candidates with the LUC, even for candidate ads that do not meet the disclaimer requirements. 

BCRA amended 315(b) of the Communications Act to provide that a federal candidate “shall not be entitled” [emphasis added] to receive the LUC if any of his advertisements have failed to include the required Communications Act Statement. 47 U.S.C. 315(b). Under the plain meaning of these statutory provisions, a candidate who satisfies the Communications Act Statement requirement is guaranteed the LUC as a matter of law. It is equally plain under these statutory provisions that a candidate who fails to include the Communications Act Statement does not have a legal guarantee to receive the LUC. In this circumstance, the statutory language is permissive, making clear that broadcasters have the discretion to provide the LUC to candidates who fail to include the Communications Act Statement, but are not legally required to do so.  Therefore, although a candidate may not be “entitled to” the LUC if his ad lacks an adequate disclaimer, the candidate may nevertheless receive the LUC at the discretion of the broadcaster. 

This interpretation is consistent with how the FCC has construed the BCRA amendments to the Communications Act.  See footnote 5, Agenda Doc. 05-08 (FCC has interpreted BCRA amendments to allow a station to offer the LUC to a candidate who fails to include an adequate Communications Act Statement, as long as the station treats all Federal candidates in a consistent, non-discriminatory manner). See also McConnell v. FEC, 540 U.S. 93, 364 (2003) (Stevens, J., dissenting) (observing that the statute “does not require broadcast stations to charge a candidate higher rates for unsigned ads that mention the candidate’s opponent. Rather, the provision simply permits stations to charge their normal rates for such ads.”) (emphasis in original). 

Accordingly, we believe the law plainly permits broadcasters to provide candidates with the LUC, regardless of whether the candidates’ ads satisfy the “stand by your ad” disclaimer rules, and we believe the Commission should have decided this matter on that basis.