It has been eight months since an interview Federal Election Commissioner Brad Smith gave to C/Net News provoked a blogswarm over the possibility of Internet regulation by the FEC. Smith’s warning – that bloggers and other Internet activists face a world of uncertainty when then engage in overtly political speech – is as true today as it was in March.

Not that nothing has happened. Since that interview, the FEC released a draft Rule and held hearings, but has not produced a final rule. The FEC was compelled to act to revise an exemption for the Internet it has inserted in the definition of the phrase “public communications.” That exemption was found contrary to the intent of BCRA by a federal district judge. The FEC did not appeal that decision – instead it opened a rulemaking to revise the exemption. The FEC went further, however, and included in its Notice and proposed rule questions about how bloggers and other Internet content providers should be treated more generally. Specifically the FEC asked in what circumstances they should be protected from regulation by the exemption the law contains for news and commentary, or when they could be protected by an existing exemption for volunteer work.

Many bloggers and groups that operate websites participated in the FEC’s July public hearings, urging a hand-off posture toward Internet political speech. A number of “reform” groups stepped forward to urge more modest protections for Internet activity. Comments are available here.

When the FEC will release a final rule, and what the scope of that rule will be, is anyone’s guess. Since Commissioner Smith made his comments, he has departed from the Commission to return to academia. Three more Commission seats are occupied by hold-over Commissioners. So, the Commission could see profound changes in personnel in the coming weeks, which would mean that the Commissioners voting on the Internet Rule would not be the ones who heard testimony and asked questions of the various witnesses. That fact could give the career staff greater sway over the final product, and produce a more complex and regulatory final rule as a result.

In light of that uncertainty, this week a bipartisan group in Congress attempted to resolve the aspect of the law that was subject to court order. HR 1606 would have codified in the statute the FEC’s existing exemption for the Internet from the definition of “public communications”, which has remained the law in force pending completion of the rulemaking. This would solve the issue identified by the court – that Congress’s intent to exclude the Internet was insufficiently clear to support the FEC’s rule. Congress’s enactment of an exemption could hardly be clearer.

However, H.R. 1606 was greeted with howls of outrage by campaign reform groups. These groups, chiefly Democracy 21, the Campaign Legal Center, and Common Cause, asserted that the “public communication” exemption would allow rampant circumvention of the Bipartisan Campaign Reform Act (McCain-Feingold), and permit corporations to use unlimited funds on the Internet to support candidates and parties.

In general, these assertions were incorrect. Corporate or labor advertising advocating the election or defeat of a candidate would remain illegal, even with HR 1606’s exemption. The one aspect of the law that would have been loosened slightly by HR 1606 involves situations in which a candidate “coordinated” with a prohibited source like a corporation, to have the corporation run an advertisement that the candidate might like, but contained no express advocacy of the candidate’s election or his opponent’s defeat. One additional wrinkle to all this is that the FEC’s “coordination” rule was also challenged in court in an unrelated case, and is currently being rewritten.

(As an aside, coordination accusations are easily made by political opponents, and their investigation consumes enormous legal resources, especially for the accused. The uncertainty over the scope and clarity of any new coordination rule should be another red flag to political activists.)

Additionally, with HR 1606 Internet messages would not require the same legal disclaimers (the lines that identify who paid for an advertisement) as broadcast, print, or other general advertising. And if the Internet were exempted from rules pertaining to public communications, groups that are already political committees, which are restricted in how they can fund election-related communications in old-fashioned media like TV and radio, could use a wider range of funding to pay for their Internet expenditures.

So, the exemption would make it easier in a few situations to use nonfederal money for Internet communications. That much is true, but lost in the fog of invective that surrounded the debate on the bill. Quoting for example Rep. Marty Meehan on the House floor : “For example, let us say we had a prescription drug bill that was written by the pharmaceutical industry. This Congress could pass that bill in the middle of the night, and then members of Congress who passed the bill could actually ask those same pharmaceutical interests to write six-figure checks for campaign ads for them to appear on the Internet.” Well, not exactly. Consider the New York Times, which editorialized: “But the Internet would become a free-fire zone without any limits on spending or reporting requirements.” Not true. Trevor Potter, president of the Campaign Legal Center, called the bill’s supporters “scaremongers.”

Apt description, wrong party. The exemption is current law today, and none of the developments have taken place – quite possibly because in most situations they would violate some other part of the law. For example, it would remain illegal for a corporation or union to fund a campaign ad for a federal candidate.

Meanwhile, what has happened to the issue that was actually of interest to most of the bloggers who reacted to the Brad Smith C/Net interview – the regulation of blogging and other Internet political activity? The recent House action did not try to craft statutory protections in that arena, because the goal was to enact a noncontroversial bill under a suspension of the House rules. Christopher Shays, one of the chief authors of modern campaign finance reform, has proposed an alternative that, he claims, would protect individual bloggers. HR 4194, like HR 1606, only affects what might be a “public communication.” It claims to “exempt” the Internet, but then excludes from the exemption anything run (by anyone) for a fee, or by a corporation or labor organization, or by a party or political committee. It then excludes from the corporate exception corporations with the principle purpose of operating a Web log – which is undefined. So, in the confined corner of the universe dedicated to regulating “public communications” the Shays measure would add a crazy quilt of exceptions, exemptions and exclusions. Surely we can do better than this.

Meanwhile, the big questions for bloggers remain unanswered, such as whether group blogs become political committees once they spend $1,000, in what situations blogs can provide fundraising links for candidates and parties (and how that help will be valued), whether incorporated bloggers may expressly advocate for or against federal candidates and parties, whether internet journalists can use their office or faculty computer to blog about politics, whether political bloggers can post under a pseudonym or would need to file reports or feature “disclaimers” that provide their true identity. In truth, neither bill addresses these thornier issues.

In my opinion, the measure that would solve a host of these problems would specifically add the Internet to the law exempting news, commentary and editorials from the definition of “expenditure.” The “expenditure” definition is a threshold concept in the campaign finance statute upon which regulation depends. Exempting news, commentary and editorials on the Internet from “expenditures” means that the incorporated status of an Internet journalist, like a print or broadcast journalist, is irrelevant. It means the ownership of his computer is irrelevant. His activity won’t be reportable, and won’t require a disclaimer – so long as it is news, commentary or an editorial. To be sure, corporations and unions could start news sites and blogs, which would enjoy the exemption for their news and commentary content. Much like, under the present law, they can start newspapers, magazines, and cable networks . . . which doesn’t insulate the corporation from regulation if it decided to produce a television ad on behalf of a candidate, but does protect the news, commentary and opinion content from treatment as an illegal expenditure.

Furthermore, there are good reasons why the Internet should be less restricted than traditional news and information sources. The barriers to entry--access to a computer and a modest hosting fee--are very low. Internet information is completely reader driven – although advertisements on the radio or television may invade a recipient’s space, one’s web browser won’t go to a site unless one points it there. (Not true, of course, for blog ads and pop-up advertising – this content comes unbidden, but since it doesn’t qualify as news, commentary or an editorial it would not be exempt.) Finally, the Internet communication model leaves behind the one-to-many model of major media. Bloggers often are writing for the same people they are reading, and the exchange resembles nothing so much as a conversation among colleagues or neighbors.

In short, if Congress is serious about protecting bloggers and other Internet journalists, adding a reference to the Internet to the existing exemption for news, commentary or editorials would be the smart move.