Late last week, the US Court of Appeals for the Fourth Circuit issued a decision in a case called Washington Post v. David J. McManus, upholding the ruling of the US District Court finding that the State of Maryland’s attempts to impose political advertising reporting obligations on online platforms to be an unconstitutional abridgment of these companies’ First Amendment rights.  The suit was brought by the Washington Post and several other companies owning newspapers with an online presence in the State.  Their arguments were supported by numerous other media organizations, including the NAB and NCTA.  The Maryland rules required that online advertising platforms post on their websites information about political ads within 48 hours of the purchase of those ads.  That information had to be maintained on the website for a year and kept for inspection by the Maryland Board of Elections for a year after the election was over.  The appeals court concluded that the obligation to reveal this information was forcing these platforms to speak, which the court found to be just as much against the First Amendment as telling them to not speak (e.g., preventing them from publishing).  As the court could find no compelling state interest in this obligation that could not be better met by less restrictive means, the law was declared unconstitutional.

The Maryland law required the following disclosures on the website of a platform that accepted political advertising:

  • the ad purchaser’s name and contact information;
  • the identity of the treasurer of the political committee or the individuals exercising control over the ad purchaser; and
  • the total amount paid for the ad.

In addition, the platform had to maintain the following information for a year after the election and make it available to the State authorities upon request:

  • the candidate or ballot issue to which the qualifying paid digital communication relates and whether the qualifying paid digital communication supports or opposes that candidate or ballot issue;
  • the dates and times that the qualifying paid digital communication was first disseminated and last disseminated;
  • a digital copy of the content of the qualifying paid digital communication;
  • an approximate description of the geographic locations where the qualifying paid digital communication was disseminated;
  • an approximate description of the audience that received or was targeted to receive the qualifying paid digital communication; and
  • the total number of impressions generated by the qualifying paid digital communication

The appeals court found that this “compelled speech” forced these platforms to “speak” when they otherwise might not want to – the “speaking” being the mandatory publication of information on their website.  The court also pointed to the potential of these rules to chill political speech, by compelling companies to reveal information about those who might otherwise not want to disclose that they are taking a position on a controversial issue or election.  The court found that anonymity in political speech was part of a long tradition in the US, and it could subject those buying the political ads to harassment.  Also, the added burden of collecting this information could cause platforms to reject political ads in favor of advertising where no such burden was imposed. 

In the court’s view, the State’s goals of combating foreign interference in US elections and providing more transparency about political advertising could be met by requiring the disclosure of information to the State by the purchasers of the ads themselves, rather than by imposing the obligations on the platforms that accepted that advertising.  Moreover, the court could not see how the disclosure obligations would stop foreign meddling in elections, especially as there had been no showing of any attempts by foreign entities to buy ads on the vast majority of the platforms that would be subject to the laws, such as small newspapers that publish in the State and post their news on their websites.  Given the burden, and the more direct path to achieve the required disclosures directly from the political advertisers themselves, the court found that the state interests did not justify this intrusion into First Amendment rights.

Interestingly for broadcast readers, Maryland attempted to justify its rules by analogizing them to the rules imposed on radio and television stations (and on other certain other FCC-regulated entities) which require disclosures about political advertising in each station’s online public file (see, for instance, our articles here and here on the latest FCC-required disclosures on political issue ads, and our article here on the general political file obligations).  The court, relying on old precedent including the Red Lion case that justified increased broadcast regulation because of the scarcity of the spectrum, found that FCC regulation did not justify the State’s intrusion into this area.  Given the virtually unlimited capacity of the Internet, the scarcity doctrine justifying broadcast regulation was seen by the court as being inapplicable to online platforms.  The court also suggested that broadcasters did not have the same interest in speech as did a newspaper, suggesting that broadcast stations were not as much “expressive products” as were the newspaper plaintiffs in this case, because in the court’s view broadcasters tend to retransmit programming developed by others.  I know many broadcasters would certainly dispute that characterization (and, even if true for newspapers, it hardly seems true for other online platforms like Facebook and Google who would also be subject to Maryland’s regulations), but it was nevertheless advanced by the court in justifying this disparity in regulation.  (See our articles here and here about other disparate treatment of broadcast and online platforms in their treatment of political ads).

The impact of this decision could be wide-ranging.  As we wrote here, several states, including New York and Washington State, have laws adopting similar requirements for the disclosure of information about political advertising on online platforms (and, at least in the case of Washington, even on traditional media platforms).  The Fourth Circuit’s analysis might be employed to question that regulation.  Federal efforts, through various proposals, have advanced similar regulation on a nationwide basis.  The First Amendment analysis by this appeals court would suggest that these efforts may also be subject to challenge.  Watch carefully as this decision could lead to far more policy debate in coming months – especially as we are likely to see a massive growth in online political advertising in 2020.  We are sure that this debate about the disclosure of online political spending has not ended with this decision.