Appeals Court Says First Amendment Limits Regulation of Online Political Advertising: Implications for Congress

Appeals Court Says First Amendment Limits Regulation of Online Political Advertising: Implications for Congress

Legal Sidebari

Appeals Court Says First Amendment Limits
Regulation of Online Political Advertising:
Implications for Congress
January 10, 2020
The proliferation of online political advertising has sparked a national conversation about its perceived
harms. Some have argued that online political ads are more likely than their offline counterparts to
include false claims and facilitate foreign influence in U.S. elections. These criticisms have led to calls for
more government regulation of online political advertising, and some government officials have
responded to that call. For example, in June, the chair of the Federal Election Commission (FEC), the
federal entity that generally regulates political campaign communications, advanced a rule proposal that
would require certain online political advertisements to contain attribution statements, known as
disclaimers. Another example is the Honest Ads Act, which would extend federal campaign finance law
disclosure and disclaimer requirements to online platforms for paid internet and paid digital
communications and would require online platforms to maintain a publicly available file of requests to
purchase certain political advertising. That bill was incorporated into H.R. 1 (116th Cong.), which passed
the House in March 2019, and has been reintroduced as a stand-alone bill in both the House and the
Senate. While there have been few, if any, enacted federal laws focusing on online political
advertisements, a number of states have passed legislation on this front.
However, regulation of political speech can raise free speech concerns, and laws regulating online
political advertising may be susceptible to constitutional challenges. On December 6, 2019, the U.S.
Court of Appeals for the Fourth Circuit (Fourth Circuit) ruled in Washington Post v. McManus that parts
of a Maryland law regulating online political advertising violated the First Amendment because they
impermissibly burdened political speech, as applied to certain online publications. This Sidebar discusses
the McManus decision and what it suggests about possible constitutional limitations on Congress’s ability
to regulate in this area.
Background
Maryland enacted the Online Electioneering Transparency and Accountability Act (OETA or the Act) in
May 2018. The Act extends the state’s campaign finance disclosure requirements for television, radio, and
print advertisements to online political advertisements, requiring ad purchasers to make specific
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disclosures about their identity and how much they spent. These requirements were not challenged in
McManus. But the Act also imposes disclosure and recordkeeping requirements on online platforms that
host paid political advertisements. Specifically, for federal and state elections, covered platforms must
publish certain information about the political advertisements they host, including “the identity of the
purchaser, the individuals exercising control over the purchaser, and the total amount paid for the ad.” The
Act also imposes recordkeeping obligations, compelling platforms to collect and retain certain records
about the purchasers and make them available for inspection by the state. Under the Act, “online
platform” means “any public-facing website, web application, or digital application . . . that: (1) has
100,000 or more unique monthly United States visitors or users . . . ; and (2) receives payment for
qualifying paid digital communications.”
The Washington Post and other newspapers that qualified as online platforms subject to OETA challenged
the Act’s disclosure and recordkeeping requirements in court, arguing that these provisions violated
constitutional protections for free speech and free press. The trial court sided with the plaintiffs and
granted a preliminary injunction preventing the state from enforcing the Act against the plaintiffs while
litigation proceeds. On appeal, the Fourth Circuit affirmed this decision.
The Supreme Court has outlined a wide variety of tests that courts should use to evaluate First
Amendment challenges to laws, depending on the particular circumstances. If a law targets speech
because of its content or compels someone to speak, it will generally be subject to an analysis known as
“strict scrutiny” and will be presumed unconstitutional unless the government proves that the law is
“narrowly tailored to serve compelling state interests.” On the other hand, the Court has said that some
disclaimer and disclosure requirements targeting political or commercial speech can, at times, be subject
to a lower level of scrutiny, meaning that they will be more likely—but not guaranteed—to be upheld as
constitutional. Thus, for example, in Citizens United v. FEC, the Supreme Court said that certain
disclaimer and disclosure requirements in the Federal Election Campaign Act (FECA) survived “exacting
scrutiny,” a standard of review requiring the regulation to be substantially related to “a ‘sufficiently
important’ governmental interest.” The Court has stated that in certain circumstances, disclaimer and
disclosure requirements may be more constitutionally permissible because, in contrast to a ban or
limitation on certain types of speech, they “impose no ceiling on campaign-related activities,” and “do not
prevent anyone from speaking.” Thus, disclosures are generally less restrictive of speech. But only certain
types of disclosure requirements will qualify for this more lenient standard.
Fourth Circuit Decision in Washington Post v. McManus
In McManus, the Fourth Circuit suggested, but did not squarely hold, that OETA should be subject to
strict scrutiny because it contained “a compendium of traditional First Amendment infirmities.” The court
ruled that the Act targeted “one particular topic of speech—campaign-related speech,” making the Act “a
content-based regulation.” Further, the type of speech targeted was “political speech,” which courts
generally regard as especially important and worthy of heightened protection. The court also emphasized
that the Act compelled speech, which would generally also trigger strict scrutiny.
According to the Fourth Circuit, the state had a higher burden of proof because the law applied to online
platforms. Unlike other campaign finance regulations that have survived judicial scrutiny, the court
observed, OETA “burdens platforms rather than political actors.” The court said that OETA’s
requirements made it more expensive for the newspapers to host political advertisements due to
compliance costs and potential penalties. The court expressed concern that platforms, whose primary
motivation for hosting advertisements is raising revenue, would be unlikely to host political
advertisements if they were subject to disclosure and recordkeeping requirements: as the Fourth Circuit
noted, at least one online platform had already stopped hosting political advertisements in Maryland,
citing the new requirements. By contrast, in the view of the court, these types of requirements are less
likely to deter political actors, who have non-financial motivations for placing political advertisements—

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such as winning elections or raising awareness about certain issues. Consequently, the court believed that
imposing disclosure and recordkeeping requirements on platforms raised more significant concerns about
chilling speech.
The Fourth Circuit also suggested that OETA’s requirements should be subject to heightened scrutiny
because they were being imposed on newspapers. While recognizing that the Supreme Court has
approved of similar disclosure obligations imposed on broadcasters, the Fourth Circuit concluded that
these cases should not necessarily govern its consideration of requirements imposed on newspapers’
websites. The court emphasized that the Supreme Court has allowed greater regulation of the broadcast
industry, as compared to other types of media. The Fourth Circuit referenced a 1997 decision in which the
Supreme Court ruled that the special factors allowing the government to more freely regulate broadcast—
namely, the history of regulation of the industry, the scarcity of broadcast frequencies, and its invasive
nature—were “not present in cyberspace.” Additionally, the Fourth Circuit said the Constitution also
provides more protection for “news products.” Citing Supreme Court cases recognizing that editors have
a First Amendment right to select what material goes into their newspapers, the court suggested that
OETA raised significant constitutional concerns by forcing news outlets to publish certain information,
and brought “the state into an unhealthy entanglement with news outlets.”
Ultimately, however, the Fourth Circuit said that it was unnecessary to decide whether strict or exacting
scrutiny applied because the state failed “even the more forgiving standard of exacting scrutiny.” The
appeals court noted that the state’s primary justification for the law was that it would “help deter foreign
interference in its elections.” But in the court’s view, OETA was not appropriately tailored to achieve this
interest. The Fourth Circuit concluded that by focusing on paid content supporting specific candidates or
ballot initiatives, the Act did not regulate the type of unpaid issue advertising that foreign nationals had
primarily used in the past to attempt to influence the electorate. According to the court, OETA was too
narrow in this respect. The Fourth Circuit also said that the Act was too broad in other respects: namely,
in which online platforms it included. After noting that most foreign interference had occurred on larger
social media sites, the court held that the state had not sufficiently demonstrated, based on “facts on the
ground,” that it needed to apply the law to news sites or smaller platforms.
Implications for Congress
The Fourth Circuit’s ruling in McManus limits Maryland’s enforcement of the challenged portions of the
OETA for the time being and does not appear to directly affect any federal laws. However, the decision
may provide some insight into how federal courts would review any federal laws imposing disclosure
requirements on online platforms that host political advertisements.
First, should Congress decide to impose disclosure and recordkeeping requirements on online platforms,
instead of regulating only the political speakers placing the advertisements, McManus suggests that such
legislation may raise more serious First Amendment concerns. As the Fourth Circuit observed, the
Supreme Court has upheld “customary” campaign finance laws requiring disclosure and disclaimers by
political actors who purchase ads because such requirements, although they may burden speech, do not
limit or prevent speech. In contrast, as discussed above, the Fourth Circuit determined that imposing
costly disclosure and recordkeeping requirements on online platforms, who are motivated primarily by
financial interests, is more likely to deter speech. In the case of foreign or anonymous actors, it may be
difficult to enforce disclosure requirements on those individuals’ content without regulating the platforms.
Second, the McManus decision suggests that courts will apply a heightened level of constitutional
scrutiny to laws that apply outside broadcast media. The Supreme Court has held that in general,
government regulation of online content would be subject to ordinary levels of scrutiny, meaning that as
compared to broadcast regulation, regulation of internet media is more likely to be unconstitutional.
Further, as the McManus court pointed out, courts have been particularly skeptical of laws that interfere

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with newspapers’ ability to exercise editorial control over their content. Because newspapers brought the
McManus challenge, the Fourth Circuit expressly stated that it was not addressing “the wide world of
social media.” However, some commentators have suggested that other online platforms should be
viewed as analogous to newspaper editors, in the sense that they also exercise editorial discretion in
deciding what content to host and should therefore receive similar First Amendment protection. If courts
were to agree with this view, then any regulation requiring other types of online platforms to host or take
down content or make disclosures about that content could be subject to heightened constitutional review.
Therefore, should Congress decide to impose disclosure and recordkeeping requirements on online
platforms comparable to OETA’s, courts may require a robust justification for such regulation under a
heightened standard of review before finding them constitutional. Moreover, even if the disclosure
requirements qualify for review under one of the more lenient standards that sometimes apply to political
or commercial disclosure requirements, the Supreme Court may have signaled in one recent decision that
courts should apply those lower standards more rigorously. Although the Supreme Court has upheld
FECA’s current disclosure and disclaimer requirements under exacting scrutiny as discussed above, to the
extent that any new requirements serve other government interests or address the problem in an
alternative way, courts might evaluate these regulations differently. Congress would likely have to explain
what interest the law serves and why this law is appropriately tailored to address this concern. In
particular, McManus suggests that Congress may want to carefully justify any decisions to impose
disclosure or recordkeeping requirements on the platforms themselves, as opposed to ad purchasers, and
explain why the covered platforms should be subject to such requirements, perhaps considering whether
to exempt news sites or smaller platforms. Finally, should Congress decide to impose disclosure and
recordkeeping requirements that have a lower regulatory burden and lesser penalties, as compared with
OETA, courts may be more likely to uphold them.
The legal landscape is likely to evolve further on this issue. Other states beyond Maryland have imposed
disclosure requirements on online platforms. Challenges to those laws could generate more case law
evaluating the constitutionality of these types of requirements. Further, if Maryland appeals the Fourth
Circuit’s decision, the Supreme Court could weigh in on the issue. Finally, in deciding whether and how
to regulate political advertising on online platforms, Congress may want to consider the facts on the
ground. Platforms are changing their policies about hosting political advertisements in response to public
pressure, state laws, and international regulation. For example, Facebook requires political advertisers to
complete an authorization process and maintains a library of political advertisements. By contrast, Twitter
has decided to ban some political advertising altogether. For discussion of some of the policy
considerations that may go into regulating online political advertising, see this In Focus.

Author Information

Valerie C. Brannon
L. Paige Whitaker
Legislative Attorney
Legislative Attorney

Congressional Research Service
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