I received the following via e-mail from Victoria Wu, counsel to FEC Commissioner Smith (she has given me permission to post):

Background on Commissioner Smith’s Comments re: FEC Internet Rulemaking
At the Federal Election Commission’s March 24 meeting approving a Notice of Proposed Rulemaking on internet regulation, Commissioner Smith made unwritten comments describing his position and the recent history surrounding the notice. Many people have asked for copies of Commissioner Smith’s comments and for copies of the documents he cited. Although there was not a prepared written statement at the meeting, below is a summary of the Commissioner’s comments, and citations in context, for your assistance. Links are added when available.
1. Smith noted prior to his C/Net interview, his colleagues Vice Chairman Michael Toner and Commissioner David Mason had both made similar public comments regarding regulatory risks to the Internet from this rulemaking. See Amy Keller, “Policing Internet Politics?” Roll Call, Jan. 14, 2005 (subscription is required).
2. Commissioner Smith echoed similar views in an interview with C/Net after reading an article there which suggested that only “paid ads” would be at issue in the rulemaking. Commissioner Smith also pointed out that in the C/Net interview, he had said that he believed that the Commission was “sensitive” to the issues involved in internet regulation, and noted that all of the issues he had mentioned in C/Net were, in fact, addressed at some point in NPRM now before the Commission.
– Original story here
– Smith interview here
3. Judge Kollar-Kotelly’s rejection of the FEC’s internet exemption was not limited to “paid ads”. Nor did the plaintiffs challenging the regulation certainly so limit their claim. Commissioner Smith noted that in another part of the suit the plaintiffs had specifically, and also successfully, challenged the FEC’s decision to exempt certain unpaid advertisements from the law’s provisions limiting broadcast ads within 60 days of an election, and thus questioned whether, under the reasoning applied by Judge Kollar-Kotelly in that portion of the case, a regulation limiting internet regulation to paid ads would be upheld by the court.
Contrary to Commissioner Weintraub’s statement at the meeting that “for people concerned about the effects of money in politics, the internet can only be considered a good thing,” Commissioner Smith noted that the brief of plaintiffs Representatives Shays and Meehan is replete with comments on the dangers of the internet. He read various quotes from the brief, among them a portion in which plaintiffs approvingly quoted comments made in Congress that efforts merely to minimize (not exempt) internet regulation in Congress were a “poison pill,” a “loophole,” “a step backward,” and “anti-reform,” and would “make the internet ‘a favored conduit for special interests to fund soft money and stealth issue ads into federal campaigns.'” That section of the plaintiffs’ brief concluded that a deregulated internet, “opens an avenue for rampant circumvention of all of FECA’s and BCRA’s central provisions.”
– See Shays v. FEC, 337 F. Supp.2d 28 (D.D.C. 2004) here . Key portions are at pages 48-58 (striking down internet exemption), and 153-155 (striking down exclusion of unpaid ads from definition of “electioneering communications.”) (Note: Some have trouble directly linking to this page. If so, try linking only to http://www.fec.gov/pages/bcra, then looking for the document from this index page.)
– See Plaintiff’s Motion for Summary Judgment pp. 23-28 here
4. After Commissioner Smith’s C/Net interview, interest sharply increased in the rulemaking. Two Commissioners tried to assure the public that the rule would be reasonable. Chairman Thomas’s comments to the Politics Online Conference at George Washington University, however, corroborated Commissioner Smith’s C/Net interview about the scope of potential regulation.
– Commissioner Weintraub here
– Transcript of Chairman Thomas’s address to the Politics Online Conference here
5. Representatives of the “reform” community also attempted to calm public opinion. The most vigorous effort came from the Campaign Legal Center and its President, Trevor Potter (who served as counsel to Senators McCain and Feingold in the Shays lawsuit that struck down the internet exemption). However, their claims that they only sought to regulate paid ads seem contrary to comments written by Mr. Potter just days earlier, in February, 2005, for the Campaign Finance Sourcebook published by the Brookings Institute. Nevertheless, Commissioner Smith noted that he was pleased that the Center was apparently moving off its earlier calls for broad internet regulation.
– Campaign Legal Center press release “Setting the Record Straight: There is No FEC Threat to the Internet” here
– Copy of email sent to Election Law Listserv by Trevor Potter here
– The exchange among Listserv members is also accessible by the public and can be found here
– Mr. Potter’s specific posts here and here
– February 2005 version of Campaign Finance Sourcebook, also written by Mr. Potter, with a broader interpretation of how political activity on the Internet is regulated here
– Senators McCain and Feingold also sought to reassure the public that their only concern was paid ads here
6. As attention grew, it became obvious that the issue was not limited to “paid ads.” Although the initial press release of Senators McCain and Feingold, linked above, indicated that only paid ads were at stake, their later public comments seemed to implicitly concede that the rulemaking had much broader implications. While BCRA’s sponsors called generally for a careful approach to regulation, Commissioner Smith noted that their statements included many caveats and did not rule out any form of regulation, and so it remained unclear how broad or narrow they believed the Commission’s regulations should be.
– See Senator Feingold’s Blog entry
– Ex Parte communication on Notice of Proposed Internet Rule by senators McCain & Feingold; Congressmen Shays and Meehan here
Commissioner Smith expressed his hope that during the comment period the lawmakers would comment on the specific proposals within the NPRM, and state clearly whether or not they supported those proposals.
7. The Notice of Proposed Rulemaking, as presented to the Commission and approved with only minor revisions, is found here.
After publication in the Federal Register, there will be a 60 day comment period. The hearing dates are Tues., Jun. 28 and Wed., Jun. 29.
Please let me know if you have any questions.