Characterizations, editorial comments, abbreviations and shorthand references are solely PPA Highlights author Barnaby Zall’s, and do not represent the views or positions of the Public Policy Legal Institute, the First Tuesday Lunch Group or their members and participants. Suggestions and corrections welcome.
FIRST TUESDAY LUNCH GROUP
Big Leadership Transition at First Tuesday Lunch Group: The First Tuesday Lunch Group has existed in a variety of forms and under several names for more than thirty years, serving as an independent and neutral discussion forum for some of the country’s top legal and public policy advocacy practitioners to exchange news and information about public policy advocacy and political activity. The FTLG was co-founded by Elizabeth Kingsley and Barnaby Zall, along with Susan Leahy and many others, in May 2010, as an expansion of an earlier discussion group focused more on tax-exempt organizations. Now, as of December, 2022, the FTLG will have a new set of experienced and capable public policy advocacy practitioners at the top of the luncheon table, including David Keating, President of the Institute for Free Speech, Katherine LaBeau, partner at the Elias Law Group, and Steve Roberts, partner at Holtzman Vogel Baran Torchinsky & Josefiak. Kingsley, Zall, and Leahy, long-time FTLG “Cat-Herders,” are expected to remain active in the group during the transition.
IRS Commissioner Rettig Kicked to the Curb: Internal Revenue Service Commissioner Charles Rettig, a former top tax lawyer from Beverly Hills, California, steered the IRS through the pandemic, including processing massive stimulus payments, but the Washington Post and other outlets reported last month that the Biden Administration decided to replace him when his five-year term expired in November. Rettig’s last message stresses the Service’s accomplishments and doesn’t mention exempt organizations. Treasury Secretary Janet Yellen told the Post: “I want to thank Commissioner Rettig for his tireless service to the American people across two administrations, and his leadership of the IRS during the difficult and unique challenges posed by covid-19. I am grateful to him for his partnership and efforts to ensure taxpayers had the resources they needed to make it through the pandemic.” Douglas O’Donnell, Deputy Commissioner for Enforcement and Service, who started as a revenue agent in 1985, will lead the agency on an interim basis beginning Nov. 12.
FY 2023 TE/GE Program Letter: Personnel, Data-Driven Compliance Reviews, New IRM Audit Manual Highest Priorities: Tax Exempt/Government Entities Division Commissioner Edward Killen and Deputy Commissioner Rob Choi released IRS Pub. 5313, the Fiscal Year 2023 Program Letter for TE/GE. The program letter – one and a half pages – is likely short because TE/GE’s priorities are entirely drawn from the IRS Strategic Plan FY 2022-2026 – a one page diagram. TE/GE has the same four strategic goals:
- Service – “we must ensure that taxpayers have a positive experience supported by professional, timely, and effective interactions,”
- Enforcement – “our commitment to using data to select the most appropriate returns for compliance action remain [sic] steadfast,”
- People – “We seek to create an open environment and inclusive culture that supports our employees in their personal and professional growth as they pursue their full potential,” and
- Transformation – “Support the IRA Transformation and Implementation Office in compliance transformation and implementation of the tax provisions of the IRA impacting TE/GE customers [and] … Launch the new consolidated TE/GE Examination Internal Revenue Manual (IRM).”
For those who wondered, the program letter points out that “In FY2022 we hired 187 new employees, and we anticipate a greater number in FY2023. Engaging our new colleagues, welcoming, mentoring and training them is imperative.” Indeed, given that in recent years, the TE/GE workforce has welcomed many new employees without much experience with tax-exemption principles and issues. In that vein, also memorable is a reminder that the Frontline Leadership Readiness Program is routinely called “FLRP,” and the plan is to “Revise the Frontline Leadership Readiness Program (FLRP) training to include hands-on training early on in the curriculum to enable FLRP candidates to be successful.” Nothing like being thrown into the deep-end of the pool early to ensure a “positive experience’ for taxpayers. We wish much success to the new “early hands-on” FLRPers.
Blockbuster Report That Trump Sought to Weaponize IRS Against Opponents: This was one of the charges that brought down President Richard Nixon. See Impeachment Of Richard M. Nixon, Articles of Impeachment, II(2), H. Rept. 93-1305, at 3 (1974) (“He has, acting personally and through his subordinates and agents, endeavored to obtain from the Internal Revenue Service, in Violation of the constitutional rights of citizens; confidential information contained in income tax returns for purposes not authorized by law, and to cause, in violation of the constitutional rights of citizens, income tax audits or other income tax investigations to be initiated or conducted in a discriminatory manner.”). Those abuses sparked, among other things, tax confidentiality provisions in IRC § 6103 and the limits in IRC § 6104 on releasing donor information.
Now the New York Times and other media outlets are reporting that former White House Chief of Staff John Kelly said that President Donald Trump demanded the Service investigate and audit FBI officials who were, wrongfully in his opinion, pursuing him. “Officials said the two men [the Director and Deputy Director of the FBI] were chosen randomly,” some reports suggesting that the simultaneous audits were triggered by big book-signing bonuses.
Sen. Whitehouse Pressured IRS to Investigate Conservative Organizations: Trump is not the only top federal official to pressure the IRS, and Politico is not the only media organization to publish hard-hitting attacks on politicians who do so. On Nov. 30, the Daily Signal published an exclusive report on the results of FOIA requests for communications from Senator Sheldon Whitehouse to the IRS (h/t IFS). “Sen. Sheldon Whitehouse, D-R.I., called for revoking a tax exemption for a conservative group for not masking up and socially distancing during the pandemic, insisted on a slew of investigations of other conservative groups, and pressed for the Internal Revenue Service to expand its reach.” The FOIA requests were filed by the American Accountability Foundation.
The IRS routinely handles investigative requests like Whitehouse’s, and in the past, the IRS Tax-Exempt Division pointed to investigation complaints from the public as a principal targeting resource. (See article below under Department of Justice on pressure from DoJ’s Public Integrity Section as being part of the impetus for Lois Lerner to begin the 2010 targeting scandal.) Sometimes, congressional offices will solicit outside organizations to complain to them so that they can forward the requests to the IRS without seeming to do what Whitehouse is doing.
What sets Whitehouse’s requests apart is that he has a long-term “working the refs” strategy to pressure the IRS to go after 501(c)(4) organizations on grounds that objectively do not warrant IRS intervention, such as reporting differently to the IRS and the Federal Election Commission, separate agencies whose reporting requirements are different:
The final letter the IRS made available was an inquiry from Whitehouse to Rettig, Treasury Secretary Janet Yellen, and Attorney General Merrick Garland about why his concerns had not been investigated. “I have described to you flagrant and persistent instances in which 501(c)(4) organizations engage in political activity—and report that political spending to the Federal Election Commission (FEC) or its state equivalents—while telling the Internal Revenue Service (IRS) that they did not engage in any political activity,” Whitehouse wrote in the letter dated May 5, 2022. … “This fact pattern, where tax-exempt organizations’ submissions under oath to different government entities are plainly inconsistent, should present straightforward cases for the IRS and the Department of Justice (DOJ) to pursue,” Whitehouse wrote. “Such facts present prima facie cases of noncompliance with IRS rules, and predicate ‘false statement’ investigations.”
PLR 202247012 Conclusorily Finds 501(c)(4) Had More than “Insubstantial” Political Campaign Intervention “Under Whatever Test One Uses to Measure:” Private Letter Ruling 202247012, issued April 21, 2022, (h/t Katherine LaBeau) is a final determination that a c4 had too much political campaign intervention to qualify for exemption because of payments for advertisements and payments to vendors who also worked for political campaigns. The heavily-redacted PLR has little analysis and simply cites the usual suspects – American Campaign Academy, Vision Service Plan, and so on – and none dated after 2009 or any references to issue advocacy, such as WRTL II. There isn’t really any application of the law to the facts of the organization, just conclusory statements like: “it engages almost entirely in activities that constitute political campaign intervention and in activities that serve a private benefit to the interests of [redacted].” Just based on what is public, including the heavy emphasis on private benefit, this might be similar to American Campaign Academy, where the organization’s activities were deemed to promote the private interests of a political party, but in the absence of more information, that’s just speculation. The analysis does say that “Under whatever measure one uses to determine what is insubstantial, fails the test”, which is troubling unless the facts were substantially egregious. Unfortunately, the PLR also says the organization “has notified us that they will be dissolving the organization sometime this year,” so it’s unlikely to appeal the ruling in a fashion to shed more light on the situation.
Tax Gap Increases Even As Americans Pay A Higher Percentage of Taxes On Time: The U.S. has long had the highest rate of voluntary payment of taxes in the world, but there is still a massive gap between estimated true tax liability and the amount of tax paid on time. Maintaining that level of voluntary compliance is one of the major reasons for the protection of donor privacy, which federal courts have long upheld. “Congress has decided that, with respect to tax
returns, confidentiality, not sunlight, is the proper aim. Tax returns contain highly personal information that many taxpayers might wish not to have broadcast. Moreover, without clear taxpayer understanding that the government takes the strongest precautions to keep tax information confidential, taxpayers’ confidence in the federal tax system might erode, with harmful consequences for a tax system that depends heavily on voluntary compliance.” Aronson v. IRS, 973 F.2d 962, 966 (1st Cir. 1992).
Accounting Today reports on the latest tax gap estimates (which always lag many years behind current payments): “The estimated gross U.S. tax gap increased to $496 billion annually for tax years 2014 through 2016, a rise of over $58 billion from the prior estimate — and the Internal Revenue Service estimates the gross tax gap will rise to $540 billion for 2017-2019.” The Wall Street Journal added: “In tax years 2014 through 2016, Americans paid 85% of their taxes on time, up from the agency’s 83.7% estimate for tax years 2011 through 2013, the IRS said Friday. That compliance rate climbed to 87% after IRS enforcement and late payments were included, from 85.9% in the prior estimate. The IRS projects that those higher percentages were consistent for tax years 2017 through 2019.”
Republicans Vow to Address “IRS Abuse:” Following up on last month’s discussion of the plans offered by Republicans vying for seats on important oversight committees, several influential Republicans also weighed in on what they will do after being given control on Capitol Hill. Sen. John Thune, the second-ranking Republican, wrote a Wall Street Journal op-ed complaining that there was no follow-up to the massive June 2021 breach of leaked confidential taxpayer information: “Under Biden, the agency is bent on squeezing more revenue without oversight or accountability.” Rep. Jason Smith, ranking member on the House Budget Committee, published an op-ed in The Hill about “IRS Abuse Demands Answers” and used as an example, the Lois Lerner-era IRS “TAG vs. BOLO” targeting program:
Nine years ago, it was revealed that the IRS division that grants non-profit status to political organizations, overseen by a Lois Lerner, had been targeting for additional scrutiny conservative groups in the lead up to the 2012 Presidential election. Despite being at the center of a scandal where Americans’ freedom of speech was being suppressed, Lerner received nearly $130,000 in taxpayer-funded bonuses between 2010 and 2013, including a $42,000 bonus while she was under investigation for the targeting activity that occurred under her watch.
Years later, American taxpayers are just now learning how much this scandal has cost them. At the House Budget Committee, we have traced that over the years, taxpayers have footed the bill for Lerner’s legal defense to the tune of at least $3.6 million — forcing the same taxpayers whose First Amendment rights were violated by the IRS to defend the bureaucrat who violated them. Another $3.5 million has been paid to victims of the Lerner targeting scheme, totaling at least $7.1 million to deal with the fallout from the IRS’ illicit activity.
As more information comes to light about the scandal, it is increasingly baffling and frustrating that to date not a single federal employee has been held accountable. Recently unsealed emails from Lerner showed she was aware as early as 2010 that conservative groups were being held to a different standard than other applicants, and yet she did nothing. Unfortunately, this is unsurprising as her emails make it clear why she did nothing. Lerner reveals a remarkable level of disdain for conservatives and the values they hold dear — referring to her fellow Americans as “crazies” and “a[**]holes,” and writing that their “rabid, hellfire piece of religion” was destroying the country.
The Power of One Pixel: Pixels, tiny pieces of code embedded in software and Internet messages and graphics, are integral parts of the infrastructure of the modern Interwebs, since they can carry substantial amounts of information essentially without notice. Now The Markup, a new nonprofit “quantitative journalism” publication has teamed up with The Verge to release a scoop about how those secret pixels send confidential taxpayer information to Facebook from millions of taxpayers who use certain tax-reporting software:
Major tax filing services such as H&R Block, TaxAct, and TaxSlayer have been quietly transmitting sensitive financial information to Facebook when Americans file their taxes online, The Markup has learned. The data sent through widely used code called the Meta Pixel [here is a concise but understandable explanation of what that means with background documents], includes not only information like names and email addresses but often even more detailed information, including data on users’ income, filing status, refund amounts, and dependents’ college scholarship amounts. The information sent to Facebook can be used by the company to power its advertising algorithms and is gathered regardless of whether the person using the tax filing service has an account on Facebook or other platforms operated by its owner, Meta.
“Johnson Amendment” Stirs Less Controversy This Election Cycle, But Still Kicking Around: The Texas Tribune and ProPublica have an in-depth article on the Johnson Amendment, including some extended history of the 1960’s-era prohibition on political activity by churches, and intensive looks at Texas churches that continue to endorse candidates and engage in other election-related activity without fear that the IRS will sanction them. A much more professional version of journalism than other recent ProPublica efforts, not least because several participants in the First Tuesday Lunch Group make appearances to discuss tax-exempt organization law and practice, including Lloyd Mayer and Ellen Aprill.
FEC Adopts Some Final Regulations to Cover Disclaimers on Internet-related Media, Opens New Comment Period on Changing Definition of “Promoted For A Fee:” The Federal Election Commission has begun updating its regulations on required disclaimers on political ads to include those placed on web sites and other Internet-related media. The FEC has been working on these regulations for more than ten years, and this Final Rule, drafted by FEC Chair Allen Dickerson and Commissioner Shana Broussard, incorporates much of the thousands of comments the agency received over the years. The Internet-related provisions are similar to those long used to determine whether specific legacy media required disclaimers, including an exception for “small” or otherwise inappropriate media.
Commissioners Dickerson and Trainor issued a long and detailed explanation and history of FEC and judicial treatment of Internet disclaimer regulation (h/t David Keating):
During the twelve-year period this rulemaking has been pending, the internet has changed dramatically. Some internet sites and applications that were popular in 2010 no longer exist, while others that are popular now did not exist then. Technology is fleeting and ephemeral, it moves faster than the regulatory state, and neither the Commission nor the federal government at large can accurately and consistently predict how people might choose to engage in political speech in 2030, or 2050, or 2100. Therefore, the technological characteristics of a particular website, internet ad, or online platform should not be the primary basis for regulating core political speech—and demanding that an advertiser refrain from using a particular advertising format or requiring that they truncate their message to accommodate a disclaimer is not a viable solution under our Constitution.
Instead, the Commission should ground its regulations in essential First Amendment principles and draw upon technological minutia only as necessary. Accordingly, this regulation is intended to address advertising formats that exist now, formats that are in development, and formats that have not yet been invented or even conceived. After all, the medium through which a political speaker chooses to communicate can hold just as much value as the message itself, and political speakers have the right to meet their audience where that audience is, using the medium of their choosing.
Note that what was approved, 5-0 (Weintraub abstaining) (h/t David Keating) at the December 1 FEC meeting was Version B of the proposed regulations, which deleted from Version A the definition of “promoted for a fee,” a requirement intended to limit the scope of disclosures. The Commissioners voted to open a new rulemaking with a separate comment opportunity on the proposed new definition.
The FEC was set to discuss the proposed regulations at its November 17 meeting, but the agency cancelled the meeting. Not all Commissioners were on board with the original version of the proposed rules, and Commissioner Sean Cooksey told Axios that he would not support this expansion of “burdensome and confusing new disclaimer requirements” to cover Internet communications.
Outside commenters were also concerned: Institute for Free Speech Chair and former FEC Commissioner Brad Smith and IFS head David Keating issued a statement saying the proposal “needs more work.” Former FEC Chair (and First Tuesday Lunch Group participant) Lee Goodman told the Washington Examiner that “The proposal could be read to expand the regulation of free online content if a nonprofit organization pays its own staff to disseminate or ‘promote’ the content. Think of a nonprofit organization that posts a political video for free on YouTube while its staff pushes the video out across the internet — all for free. This proposal might regulate that for the first time in history. The FEC needs to define what it means to promote a free YouTube video before adopting this proposal.” Apparently, the Commissioners heeded the concerns.
FEC Asks for Comments on Possible Regulations to Permit Political Campaigns to Pay Salaries to Candidates: In its decision in FEC v. Ted Cruz for Senate, the Supreme Court expressed concern about federal regulations which discriminated against new and less well-funded candidates: “deference to Congress would be especially inappropriate where, as here, the legislative act may have been an effort to ‘insulate legislators from effective electoral challenge.’” At first glance, this principle could presage a challenge to 52 U.S.C. § 30114(b)(2), which prohibits personal use of campaign funds, and has long been the basis for FEC rejection of various mechanisms for permitting campaign funds to be used for expenditures to benefit individual candidates.
This conundrum alone might explain why the FEC has twice now asked for comments on how and whether to open a rulemaking on campaigns paying compensation to candidates. Currently, “the Commission determines on a case-by-case basis whether the use of campaign funds to pay expenses other than those listed would be a prohibited conversion of the funds to personal use. … See 11 CFR 113.1(g)(1)(ii) (providing non-exhaustive list of expenses to be determined for personal use on a case-by-case basis).” Now, the agency is asking for comments on what should be considered regularly to be “for personal use” and what might not be. IOW, the FEC is asking if, despite the statute, it can open the door to some compensation to candidates. The rationale? “As the Commission explained in the  explanation and justification accompanying the final rules, the commenters argued that the proposed rule would favor incumbents who do not face a reduction in compensation for time spent campaigning, and wealthy challengers who can afford to forego compensation.” This isn’t the first time the FEC has urged this loophole, positing it as a permissible interpretation of the statutory language.
The Commission “agree[d] with the  commenters that the payment of a salary to a candidate is not a prohibited personal use as defined under Commission regulations.” The Commission explained that this use of campaign funds satisfied the “irrespective” test because, “but for the candidacy, the candidate would be paid a salary in exchange for services rendered to an employer.” Moreover, the Commission stated, a “salary paid to a candidate would be in return for the candidate’s services provided to the campaign and the necessity of that salary would not exist irrespective of the candidacy.”
But the Commissioners are obviously conflicted about moving forward, and they ask a series of questions for commenters to address, including how to choose among a variety of alternative interpretations. At the December 1 FEC meeting (h/t David Keating), the Commissioners approved the draft rulemaking, accepting a request from Commissioner Broussard to change the draft to, inter alia, clarify some terminology and compensation caps, apparently with an eye toward helping with childcare obligations similar to those recently addressed in MURs and AOs.
Office of General Counsel Confuses Foreign Investment With Foreign Control: In MUR 7491 (American Ethane), three Federal Election Commission Commissioners issued a Statement of Reasons explaining why they did not accept the FEC Office of General Counsel’s contention that the respondent American company should be investigated for violation of the prohibition against foreign campaign involvement:
American Ethane is not a foreign national—it is an American corporation that was founded in Louisiana in 2014 … American Ethane’s initial capital came from both American and Russian persons, and the company “had not generated any income from its business activities and was funding its business operations” using that initial capital. Therefore, OGC contended that American Ethane’s contributions were made with Russian funds, and that the company thus violated both our foreign national and our corporation contribution rules. …While FECA prohibits foreign corporations from making political donations, the Commission has permitted some contributions from domestic subsidiaries of foreign parent corporations. These advisory opinions recognized that while “the government may bar foreign citizens (at least those who are not lawful permanent residents of the United States) from” making “political contributions and express-advocacy expenditures,” U.S. companies with foreign parents still have the ability to make such contributions so long as they are made pursuant to certain safeguards against direct foreign funding and control. … In fact, OGC found that there was no foreign control of American Ethane’s political giving.
Commissioners Broussard and Weintraub issued their own Statement of Reasons declaring that American Ethane was a Russian corporation: “When considering whether contributions by U.S. corporations constitute prohibited foreign national contributions, the Commission has consistently required that the contributions be made with funds that are ‘home-grown,’ that is, solely generated by the corporation’s domestic operations, and that no foreign national be involved with the decision to make the contributions. Both criteria are required. Even if a U.S. citizen makes the decision to donate a corporation’s funds, that citizen is prohibited from injecting foreign funds into the U.S. political system. The money used may not be from foreign sources.” Commissioner Weintraub also wrote a separate Statement for herself raging against her Republican colleagues: “But my colleagues are so eager to grease the skids for corporate spending in U.S. elections that they don’t seem to care where the money comes from – in this case, from (I kid you not) Russian oligarchs. This is, in a word, alarming.”
CREW Asserts Commissioner Weintraub “Is Now The Controlling Commissioner”: If you can’t beat them, join them? Long a fount of long-shot, but sometimes effective legal tactics, Citizens for Responsibility and Ethics in Washington has filed a third complaint against the FEC in its long-running struggle to sanction the American Action Network for failing to disclose its donors. CREW has opened a new front in the ongoing legal interpretation battles over the FEC’s direction and control. This time, CREW is offering a “perhaps perplexing explanation” (their phrase) of what the FEC did wrong, now relying on the fact that Commissioner Ellen Weintraub, acting alone, blocked FEC action: “the direct result of D.C. Circuit precedent providing that the commissioners who blocked the last reason-to-believe vote before the dismissal are the ‘controlling commissioners’ who speak on behalf of ‘the Commission’ with respect to the following dismissal. CREW v. FEC, 993 F.3d 880, 883 (D.C. Cir. 2021) (‘New Models’). In this case, Commissioner Ellen L. Weintraub is now the controlling commissioner as she is the commissioner who single-handedly blocked the last reason-to-believe vote.” It’s a novel theory, and perhaps a logical extension of the rejection of recent assertions by Weintraub and others that formal votes are the only way to interpret requirements of the FEC’s organic statute. See, e.g., CREW v. FEC 993 F.3d at 884-85, quoting Chamber of Commerce of U.S. v. FEC, 69 F.3d 600, 603 (D.C. Cir. 1995) (describing FECA’s judicial review provision as “unusual in that it permits a private party to challenge the FEC’s decision not to enforce”). It will be interesting to see how this plays out.
Ready For Ron Sues FEC Over Decision Not to Permit List Sharing of PAC List with Campaign: Continuing the unfortunate pattern of very prolix Complaints being filed in FEC-related cases, a SuperPAC which has built up a list of persons who would be likely to support Florida Governor Ron DeSantis if he decides to run for President has sued the FEC, claiming that Advisory Opinion 2022-12 (Ready for Ron) is wrong. The Complaint contends that providing the list of persons for free is “literal, pure political speech”, id., at P. 1, and “distorts the FECA’s plain meaning by treating a signed political petition as a ‘contribution’ … [and] flatly ignores the U.S. Court of Appeals for the District of Columbia’s binding ruling in Federal Election Comm’n v. Machinists Non-Partisan Political League, 655 F.2d 380 (D.C. Cir. 1981), holding the Commission may neither regulate efforts to draft federal candidates nor regulate disbursements to individuals who are not yet federal candidates).” Id., at P. 2. Open Secrets apparently does not like the suit.
Is Paying Influencers to Carry A Campaign Message A Way for Campaigns to “Skirt” Campaign Finance Rules? The New York Times thinks so, even though it admits that the purpose may be more to avoid social media bans and censorship:
These social media influencers and microinfluencers — noncelebrity users who have attracted a moderately large following — are paid hundreds and sometimes thousands of dollars per post to circulate political messages, and they are part of a growing group of people who are being paid by campaign operatives to create content aimed at influencing the midterm elections. Political firms, mostly those aligned with Democrats and progressive causes, are increasingly turning to them in hopes of finding ways to reach Generation Z and non-English-speaking voters, according to researchers, and they represent a novel — and unregulated — way of promoting political messages. Strategists say using influencers can enhance how campaigns engage with crucial voters who could help sway competitive races. They provide a cost-effective way to communicate to large and localized audiences that draws higher engagement and circumvents bans on political advertising on platforms like Twitter, TikTok and Instagram.
Perhaps the NYT is conflating social media advertising bans with campaign finance “rules?” And in light of recent (and increasing) governmental efforts to encourage social media platforms to monitor and ban certain speakers (see Homeland Security “misinformation” control efforts item below under Department of Justice), there may be some truth to that conflation.
FTX Founder Says He Gave to Republicans Through “Dark Money” Organizations to Avoid Media Criticism: Speaking of ways to “skirt” campaign finance rules without violating them, Sam Bankman-Fried, whose FTX cryptocurrency exchange just failed, was the second-largest donor to Democratic causes, but Insider reports that he says in a YouTube interview that he was also secretly the third-largest donor to Republicans (h/t IFS). Bankman-Fried says he gave roughly $40 million each to Democratic and Republican causes, but he made all his Republican contributions through organizations that would not reveal his identity to avoid criticism from “liberal media,” not to avoid required regulatory filings.
“Reporters freak the f*** out if you donate to a Republican,” he said. “They’re all secretly liberal and I didn’t want to have that fight, so I made all the Republican ones dark.” “Despite Citizens United being the literally the highest-profile Supreme Court case of the decade and the thing everyone talks about with campaign finance, for some reason in practice no-one can possibly fathom the idea that someone actually gave dark.”
The Republican House Investigation Agenda Continues to Take Shape: With the Republicans gaining control of the U.S. House of Representatives, various Republican House leaders have posted op-eds and statements describing their plans for future official actions. But the Republican Staff of the House Judiciary Committee jumped the gun, and released an extensive discussion of politicization of the FBI four days before the election. The Staff Report, “FBI Whistleblowers: What Their Disclosures Indicate About The Politicization Of The FBI And Justice Department,” is 1,050 pages long and provides a detailed road map of issues, evidence, and background which can be expected to guide a future Judiciary Committee investigation of the FBI and its DoJ parent. And they could be described as explosive:
This report presents what is known so far about the extent of problems festering within the FBI’s Washington bureaucracy. There is likely much more to be uncovered in the months ahead. But from what is known, it is clear the FBI needs repair. Too many whistleblowers have said that they are “saddened” by what they see happening at the Bureau. Too much is at stake to sacrifice the trust and accountability in our federal law-enforcement apparatus. The necessary first step in fixing the FBI’s broken culture and out-of-control hierarchy is to identify and understand the problem.
The New York Post has commentary. CNN doesn’t include the likely IRS investigation in its top five of expected congressional inquiries.
A Reminder of the Limits of Money – 90% of Biggest Self-Funding Candidates Failed to be Elected: Bloomberg (paywall), home of failed Presidential self-funder Michael Bloomberg, reminds us how very hard it is to substitute money for votes. “It was a brutal election year for self-funding candidates. Eight candidates poured more than $10 million of personal funds into their 2022 midterm campaigns — only one came up a winner. Democratic Representative David Trone of Maryland was the only top spender to win his race as he scored a narrow victory. Trone, co-founder of Total Wine & More and the sole incumbent among the self-funders, invested more than $12 million of his own money into the contest. That’s nearly 15 times the amount raised by his Republican opponent Neil Parrott, according to data compiled by OpenSecrets, a nonpartisan group that tracks campaign finance.”
IFS Urges Congress to “Protect the Tax Code From Being Weaponized:” Alex Baiocco from the Institute for Free Speech posted an op-ed reciting recent instances in which the IRS was asked to “police political speech.” “If the IRS opened an investigation into ‘potential violations of the Internal Revenue Code’ every time an advocacy organization made controversial claims about a highly politicized issue, the agency would quickly turn into the Ministry of Truth.”
DEPARTMENT OF JUSTICE
Leaked DHS Documents Showing Expanding Government Monitoring of “Misinformation” Stirs Controversy: The IRS is not the only leaky federal agency with secrets that cause controversy when leaked. The Intercept reported that the unreleased annual report of the federal Department of Homeland Security shows that the demise of the “Misinformation Project” did not end the federal government’s intensive efforts to uncover and intervene against tax-exempt organizations’ activities online.
The work, much of which remains unknown to the American public, came into clearer view earlier this year when DHS announced a new “Disinformation Governance Board”: a panel designed to police misinformation (false information spread unintentionally), disinformation (false information spread intentionally), and malinformation (factual information shared, typically out of context, with harmful intent) that allegedly threatens U.S. interests. While the board was widely ridiculed, immediately scaled back, and then shut down within a few months, other initiatives are underway as DHS pivots to monitoring social media now that its original mandate — the war on terror — has been wound down.
Fox News reacted with a moderate tone that surprised some observers:
A handful of President Biden’s most important federal agencies are stepping up efforts to monitor and counteract “disinformation” on social media platforms, even in the face of criticism that the administration is attempting to silence conservative or opposing viewpoints. The actions by the federal agencies come as Missouri and Louisiana are pursuing legal action against Biden, former White House press secretary Jen Psaki, Dr. Anthony Fauci and other top administration officials. The two states say these officials “pressured and colluded” with Big Tech social media companies to censor and suppress information on the Hunter Biden laptop story, COVID-19 origins and security of voting by mail during the pandemic.
Despite the ongoing lawsuit and vocal criticism by members of Congress, Biden’s agencies remain focused on countering disinformation from foreign adversaries attempting to influence U.S. elections and on certain topics, including COVID-19 origins, the deadly Afghanistan withdrawal and more.
The Washington Post’s Cybersecurity 202 ignored the Fox caution and warned: “Look for conservatives to go after DHS counter-disinformation work,” which is, as the Fox News piece shows, only partially what happened. The Post noted:
“Simply put: The American People do not approve of the Department engaging in unclear, unaccountable, and opaque efforts led by the Biden administration’s ever-changing definition of ‘truth,’” Rep. John Katko (R-N.Y.), the top Republican on the panel, said in a statement Tuesday. “Homeland Republicans continue to engage DHS to get answers and will continue to conduct intense oversight. We will continue to demand the highest levels of transparency by DHS with Congress and the public.” Katko is one of the more moderate members of his caucus and is retiring next year. That he spoke out suggests how deeply Republicans are concerned about the DHS efforts, which they label censorship.
To its credit, the Post also noted a decidedly-not conservative critic: “The American Civil Liberties Union also raised concerns on Twitter.”
Government and law enforcement officials are able to request censorship of Facebook and Instagram posts using a special portal — despite the Biden administration’s failed attempt to establish a Disinformation Governance Board, according to a new report. The previously unknown portal allows officials with .gov or law enforcement email addresses to request censorship in the name of fighting “disinformation,” The Intercept reported. Facebook reportedly created the portal for the Department of Homeland Security and other entities to squelch content. The link remains live despite the public furor over the proposed board to police domestic political speech, which was scrapped earlier this year due to backlash and questions about its legality.
Ari Blaff, writing in National Review, points out “One of the Intercept’s biggest findings was that the FBI agent who played an instrumental role in pushing social-media platforms to censor the infamous New York Post story about Hunter Biden’s laptop continued to shape DHS policy discussions.”
On the other hand, ProPublica complained that the Biden Administration jumped back too soon and inappropriately:
On his first full day in office, President Joe Biden directed his national security team to make a plan to confront domestic terrorism. In their ensuing report, Biden’s advisers homed in on “a crisis of disinformation and misinformation.” The new administration, they pledged, would work to “counter the influence and impact of dangerous conspiracy theories that can provide a gateway to terrorist violence.” But the reality of the administration’s efforts has been less robust than its rhetoric. Instead, a ProPublica review found, the Biden administration has backed away from a comprehensive effort to address disinformation after accusations from Republicans and right-wing influencers that the administration was trying to stifle dissent.
The difference? At least partially one of definition: critics point to over-reach in government targeting of legitimate speech – in other words, classic First Amendment chilling. Supporters of government action, like ProPublica, point to concerns about the security of election workers in a time of public distrust and anxiety. Perhaps a middle ground would be not calling speech “domestic terrorism” or other thinly-supported dog whistles, but instead following the long-standing judicial interpretations of what sorts of speech are “actual threats” or other exceptions to First Amendment protections. In other words, use the Supreme Court’s view: “Where the First Amendment is implicated, the tie goes to the speaker, not the censor.” FEC v. Wisconsin Right to Life, Inc., 551 U.S. 449 (2007).
Did John (“Jack”) Smith, Just Appointed As Special Prosecutor For Trump Prosecution, Start the Lois Lerner-led IRS Targeting Scandal in 2010? Lois Lerner did a fine job when she was in charge of public outreach at the Federal Election Commission, and tried hard when she took over the helm at the IRS Tax-exempt Organizations Division. However, her implementation of the “Be On The Lookout” (BOGO) strategy instead of the tried-and-true Touch and Go (TAG) system to look at potential political intervention by mostly conservative c4s ended up wrecking TE/GE’s reputation and working relationship with practitioners, and the damage still resonates today. There’s a reason why IRS TE/GE and the FEC stay separate; if nothing else, the laws are different, as are the First Amendment considerations.
One of the well-known things behind the Lerner/IRS scandal is the pressure that Lois was under from the Department of Justice to “do something about” the Tea Party and Citizens United. Lois was quite candid about it later (here’s Lois on YouTube discussing the “everybody’s screaming at us” pressure).
And one of the people applying the pressure? John (“Jack”) Smith. According to both Politico and CNN, the same Jack Smith just appointed special counsel for the current Donald Trump investigations. (Prof. Jonathan Turley explains the tangled web of investigations underway.) Jack Smith was new to the Public Integrity Section of the DoJ Criminal Division in 2010, and he was looking for things to focus on. One of those was Citizens United and the role of 501(c)(4) organizations; based on nothing more than a media article, he wrote his superiors on Sept. 21, 2010 (P. 189):
Check out [the] article on front page of ny times [sic] regarding misuse of non-profits for indirectly funding campaigns. This seems egregious to me – could we ever charge a [18 U.S.C. §] 371 conspiracy to violate laws of the USA for misuse of such non profits to get around existing campaign finance laws + limits? I know 501s are legal but if they are knowingly using them beyond what they are allowed to use them for (and we could prove that factually)? IRS Commissioner sarah ingram [sic] oversees these groups. Let’s discuss tomorrow but maybe we should try to set up a meeting this week.
CNN noted that Smith testified in closed-door interviews with the House Oversight Committee in May 2014 during an investigation of the scandal:
The meeting [between TE/GE and DoJ] had been convened to discuss the “evolving legal landscape” of campaign finance law following the Citizens United Supreme Court decision, according to a May 2014 letter written by Issa and Rep. Jim Jordan, the Ohio Republican who is expected to be House Judiciary chairman next year. “It is apparent that the Department’s leadership, including Public Integrity Section Chief Jack Smith, was closely involved in engaging with the IRS in wake of Citizens United and political pressure from prominent Democrats to address perceived problems with the decision,” Issa and Jordan wrote in the letter seeking Smith’s testimony.
Smith testified that his office “had a dialogue” with the FBI about opening investigations related to politically active non-profits following the meeting with Lerner, but did not ultimately do so, according to a copy of his interview obtained by CNN. Smith explained that he had asked for the meeting with the IRS because he wanted to learn more about the legal landscape of political non-profits following the Citizens United decision because he was relatively new to the public integrity section. He said that Lerner explained it would be difficult if not impossible to bring a case on the abuse of tax-exempt status.
Smith repeated at several points in the interview that the Justice Department did not pursue any investigations due to politics. “I want to be clear – it would be more about looking at the issue, looking at whether it made sense to open investigations,” he said. “If we did, you know, how would you go about doing this? Is there predication, a basis to open an investigation? Things like that. I can’t say as I sit here now specifically, you know, the back-and-forth of that discussion. I can just tell you that – because I know one of your concerns is that organizations were targeted. And I can tell you that we, Public Integrity, did not open any investigations as a result of those discussions and that we certainly, as you know, have not brought any cases as a result of that.”
Smith also testified that he was not aware of anyone at the Justice Department placing pressure on the IRS – and that he was never pressured to investigate any political groups. “No. And maybe I can stop you guys. I know there’s a series of these questions. I’ve never been asked these things, and anybody who knows me would never even consider asking me to do such a thing,” Smith said.
But other documents released in the litigation against the IRS which resulted in a DoJ apology and payment of millions in attorneys fees to affected organizations suggest otherwise. For example, an internal DoJ memo released under FOIA litigation with Judicial Watch shows that the meeting resulted in a substantive discussion of specific theories proposed by the DoJ Public Integrity Section, at which Lois explained the difficulties in bringing cases against c4s that relied on IRS rules. More importantly, the IRS began to deliver 1.25 million pages of taxpayer documents to the FBI, mostly 990s from targeted c4s. At the meeting, the Public Integrity Section, then headed by Smith, proposed joint investigations: “whether a three -way partnership among DOJ, the FEC, and the IRS is possible to prevent prohibited activity by these organizations.” The 2014 House Oversight Committee Report noted that “partnership” resulted in the designation of Janet Johnson – “an employee in its Criminal Investigation unit to serve as a liaison with the Justice Department on criminal enforcement relating to non-profit political speech.” (P. 176).
Note that Jack Smith carefully testified in 2014 that “I can tell you that we, Public Integrity, did not open any investigations as a result of those discussions and that we certainly, as you know, have not brought any cases as a result of that.” (Emphasis added.) That may be true in the sense of never opening a specific investigation or case in “Public Integrity,” but it certainly to have sparked activity in IRS TE/GE.
Oral Argument in Percoco v. U.S. Reveals Gap Between Views of Potential Corruption Caused by Former Government Officials Who Become Lobbyists: On Nov. 28, the U.S. Supreme Court heard oral argument on Percoco v. U.S., No. 21-1158, a case in which Joseph Percoco, a former top political aide and campaign manager to former New York Governor Andrew Cuomo, “accepted $35,000, allegedly in exchange for helping a real estate developer secure a release of certain labor law duties from a state agency. Even though Percoco was a private citizen during this entire period, he was charged with depriving the public of his ‘honest services’ by accepting a ‘bribe.’ The theory was that Percoco’s past employment as an aide to Cuomo, and his ongoing relationship with the Governor, put him in a position of ‘dominance’ over state affairs.” Brief for Petitioner, at 4.
When a public official accepts money to convince the government to do something, we call him a crook. But when a private citizen accepts money to convince the government to do something, we call him a lobbyist. That is not an arbitrary distinction. It reflects the fact that public officials hold a fiduciary obligation to act in the public’s best interests, while private citizens do not. That basic dichotomy lies at the foundation of our system of representative democracy: Citizens are constitutionally entitled to petition the government in service of their self-interests, while public officials are entrusted with making decisions in the public good. Yet in the decision below, the Second Circuit held that private citizens can owe a fiduciary duty to the public and thus be guilty of honest-services fraud for accepting “bribes” to influence government decisions.Id.,at 1.
Percoco plows both new and familiar ground in the arguments over what constitutes “corruption” and an “appearance of corruption.” For more than forty years, the Supreme Court has struggled to define “corruption,” which underlies the only government interest sufficient to outweigh First Amendment protections for political speech. Briefs include citations to AFPF/TMLC v. Bonta, Citizens United, FEC v. McCutcheon, and others well-known to public policy practitioners.
D.C. Circuit Hears Former RNC Official’s Request to Obtain Confidential Government Documents About Alleged “Hack and Leak” Campaign: Sometimes foreign governments hire or use U.S. agents to help on lobbying and civil matters, and courts in D.C. are exploring new ground in determining whether these agents can protect their documents against civil claims. The questions raised may affect the Foreign Agents Registration Act and other issues affecting public policy advocacy by, inter alia, tax-exempt organizations.
For example, former Republican National Committee Deputy Finance Chair Elliott Broidy filed suit seeking to uncover details of how a large trove of his emails leaked, allegedly by agents of Qatar, to news outlets in 2018 as part of what he has claimed was an illegal “hack and smear” campaign. “The suit, reported first by POLITICO, could have implications for the future of political warfare at a time when it is increasingly waged through ‘hack-and-leak’ campaigns like the one that targeted Hillary Clinton’s 2016 presidential campaign. It is part of a campaign by the former Republican National Committee fundraiser — who resigned amid multiple controversies last April — to turn the tables after his reputation was damaged by a raft of embarrassing news reports.” Broidy’s claims are based on RICO, as are similar claims filed in a lawsuit by the Democratic National Committee against the 2016 Trump campaign and others.
In June, District Judge Dabney Friedrich ruled that Broidy was entitled to discovery from Qatar to support his claim. Friedrich relied, in part, on the fact that FARA required the documents to be produced to the Department of Justice upon request, so there was no discovery privilege or other protective expectation. Slip op., at 17-21.
Now the federal government is weighing in on these claims as Freidrich’s decision is being appealed. Politico reports that:
A judge’s ruling allowing a close ally of former President Donald Trump to obtain documents about Qatar’s activities in the U.S. could endanger the safety of American diplomats abroad, a Justice Department attorney argued to a federal appeals court Friday. … “One critical concern to the United States is that the district court’s categorical error poses a serious threat to how the United States operates its embassies overseas, in terms of reciprocity,” DOJ lawyer Martin Totaro told a D.C. Circuit Court of Appeals panel hearing Qatar’s appeal seeking confidentiality for the records. Totaro said the U.S. “not infrequently” relies on contractors for embassy construction and security and the specter of foreigners getting access to those records in litigation overseas is alarming. … “There’s no way that a country could have an expectation of privacy when it turns over documents to FARA-registered agents,” Broidy attorney Daniel Benson said. “If the documents are open to inspection by the government at any time … how can they have an expectation of privacy in any of those documents?”
According to Politico’s report, both D.C. Circuit Chief Judge Sri Srinivasan and Judge Naomi Rao “signaled that they believed [Judge] Friedrich should instead have opted for a document-by-document approach to determine whether Qatar’s diplomatic mission had a confidentiality interest in specific communications.” But Broidy’s lawyer, Daniel Saunders, pointed out that “Qatar’s interest here is delay. We will have piecemeal prejudgment appeals that will be subject to tremendous delay and abuse. It’ll be five more years before anything happens in this case.”
Another “FARA-Related” Foreign Lobbying Case Fails On All Charges: Speaking of FARA, The Hill (channeling the New York Times) reports that Tom Barrack, billionaire head of REIT investment firm Colony Capital, was acquitted of all charges after a jury trial rejected the Department of Justice’s claims that he acted as an unpaid and unregistered foreign agent for the United Arab Emirates in violation of 18 U.S.C. § 951, which requires, as a practical matter, registration under FARA when someone acts “under the direction or control of a foreign government.” Lawfare has a good explanation of the difference between FARA and § 951. As we noted in September, this was a novel use of foreign lobbying laws for non-espionage, political activities, and threatened DoJ’s efforts to go after unpaid lobbying activities. In the wake of the acquittal, Politico repeated those points and added much detail, including quotes from Rob Kelner at Covington and other experts:
“There’s no question that this is a huge defeat for the Department of Justice,” said Rob Kelner, an attorney at Covington & Burling who advises clients on FARA. Paired with a judge’s recent dismissal of a DOJ attempt to force another prominent ally of former President Donald Trump to register as a foreign agent, Barrack’s acquittal “is going to force [DOJ] to go back to the drawing board and be dramatically more selective about the cases that they choose to prosecute,” Kelner predicted. … “These are flawed statutes, as I think juries are often recognizing, and I don’t think it’s gonna be viable for the government to continue its foreign influence fighting campaign using these statutes in the same way that it has over the last few years,” Kelner said.
Fifth Circuit Slows Discovery in States’ Suit Against Social Media Companies’ Alleged Censorship: Politico reports that the U.S. Court of Appeals for the Fifth Circuit has blocked depositions of three top federal officials ordered by the District Judge hearing a complaint filed by the states of Missouri and Louisiana “over alleged pressure on social-media companies to remove posts containing purported misinformation about the coronavirus, election security and other issues.” The panel’s per curiam opinion did not discuss the merits of the claims, but said that the lower court did not explore either the likelihood of success of the claim or the possibilities for obtaining the information without deposing the three government officials. “Because each of the officials is high ranking, ‘exceptional circumstances’ must exist before compelling testimony. … We do not find the district court’s order considered then rejected for each of the three officials whether the information sought could be obtained from alternative sources. …Further, with respect to Flaherty, it appears that the plaintiffs have not taken any written discovery at all. … Thus, before any of the depositions may go forward, the district court must analyze whether the information sought can be obtained through less intrusive, alternative means, such as further written discovery or depositions of lower-ranking officials.”
Will Hysteria Over Moore v. Harper Cause a “Constitutional Crisis?” And speaking of rushing things, Matthew Seligman, fellow at Stanford Law, has an op-ed in Politico of a different character on the pending Supreme Court’s arguments in Moore v. Harper, the “independent state legislature” case:
A rising tide of unfounded fearmongering on the left has mounted over a pending election law case at the Supreme Court. And it could blow up in liberals’ faces in 2024. … If the court rules as many expect, it could have dire consequences for state courts’ ability to ensure that federal elections are free and fair. But the baseless speculation that it would empower Trumpian state legislatures to execute a legal coup in 2024 by ignoring the results of the popular vote is worse than wrong. It’s dangerous. While sowing the seeds of panic about a conservative Supreme Court might make for good politics, it actually makes a constitutional crisis more likely in 2024. …
The battle for the minds of Americans who don’t know the details of arcane constitutional doctrine will be much harder to win if those who attempt to overturn the 2024 election can point to their political opponents’ uninformed hyperventilating from just two years prior and say: See, you already said we have this power. Those who believe in the rule of law have a grave responsibility to know what the law actually says. They should start living up to that responsibility.
Social Media Censorship May Backfire on Conservatives: And in further “unintended consequences” articles, the Atlantic has one by Conor Friedersdorf that says the push for social media censorship may backfire on conservatives like Florida Gov. Ron DeSantis: “Ron DeSantis’s Speech Policing Could Hurt the Right Too.” The article has an interesting exchange between U.S. District Judge Mark Walker and Florida’s private attorney, well-known litigator Chuck Cooper, including:
According to the transcript, the judge then asked Cooper whether, 15 years from now, after a change of government, “the State of Florida could prohibit the instruction on American exceptionalism because it alienates people of color … and other disadvantaged groups because it suggests that America doesn’t have a darker side that needs to be qualified.” “Yes,” Cooper said. He added that the state can dictate what will and won’t be taught in college classrooms 15 years from today as surely as today, even if its political profile changes completely.
Concise Reminder on the Relative Values of APA Vacatur vs. National Injunctions as Possible Remedies for Statutory Invalidity: Notre Dame Law Prof. Samuel Bray has a quick refresher (with dueling law review cites!) for those considering attacking or defending statutes on what to request as a remedy. “For those who have followed the debate over national injunctions, we now have a new entry in this genre: APA vacatur versus national injunction. … Despite its flourishing in the DC Circuit in recent decades, there is no traditional remedy of ‘vacatur.’ Scour the legal and equitable remedies and you won’t find it. Vacating is an action taken with respect to a judgment. It is not an action taken with respect to a legal norm like a statute or a rule.”
And lest you think this is a purely academic exercise, take a look at the 166-page transcript of the Supreme Court oral argument in United States v. Texas, No. 22-58 (Nov. 29, 2022), where the federal and state governments’ lawyers spent more than a hundred pages debating the terminology, scope and requirements of “APA vacatur” vs. “universal vacatur” vs. “national injunctions.” As in Prof. Bray’s article, there was discussion (and “laughter”) over whether there was a D.C. Circuit caucus on the Court, given that the Chief Justice pointed out that vacatur “with those of us who were on the D.C. Circuit, you know, five times before breakfast, that’s what you do in an APA case.” Trans., at 35.
The Affirmative Action Oral Arguments’ Most Important Line, Or Is CNN Hyping Roberts’ Rediscovered Impact? Once in a while, a single comment during oral argument turns the case in one direction or another. Recently, Chief Justice Roberts often participates in these game-changing exchanges. For example, in Citizens United v. FEC, Deputy Solicitor General Malcolm Stewart faced a series of questions about government using “electioneering communications” as a reason to ban books: Justices Alito (“The government’s position is that the First Amendment allows the banning of a book if it’s published by a corporation?”, P. 28), Kennedy (“suppose it were an advocacy organization that had a book”, id.) and Roberts (“you could ban it?”, P. 30). After unsuccessfully attempting to narrow or evade the questions, Stewart finally said: “we could prohibit the publication of the book.” Id.
Could that happen in the Harvard admissions case? During oral arguments in the most recent affirmative action cases, the attorney for Harvard University was discussing “tips” which give special treatment to certain applicants for admission, and suggested that “oboe players” might qualify for a tip. Chief Justice Roberts then tersely said: “we didn’t fight a civil war over oboe players.” CNN has the exchange here. CNN also has a response to those who feel it’s no longer a Roberts Court.
NRSC and Other Republican Party Organizations Try Again, Using FEC v. Ted Cruz for Senate, to Find A Court That Will Declare That Limits on Party Coordinated Expenditures Violate the First Amendment: Citing, in part, the Supreme Court’s recent decision in FEC v Ted Cruz for Senate, 142 S. Ct. 1638 (2022), the NRSC, the NRCC and two Republican candidates from Ohio have filed suit against the FEC and some Commissioners to have several limits on party and coordinated expenditures declared violations of the First Amendment rights of the party organizations and candidates who would have received more funds without the limits. National Republican Senatorial Committee, et al. v. Fed. Election Comm’n, et al., No. 1:22-cv-00639, S.D. Ohio, filed Nov. 4, 2022. This would be an uphill battle, see, e.g., FEC v. Colo. Republican Fed. Campaign Comm., 533 U.S. 431, 465 (2001) (party’s coordinated expenditures can be limited because otherwise they could circumvent other campaign finance restrictions). But Colorado II was a 5-4 rejection of a facial constitutional challenge, a Justice Souter opinion with a Justice Thomas dissent. Now, the plaintiffs’ attorneys must believe that the changed composition of the Court suggests that the Court’s views have changed, citing FEC v. Cruz and McCutcheon v. FEC, 572 U.S. 185 (2014), the plurality opinion of which was reaffirmed by a 6-3 vote in Cruz, as fatally undercutting Colorado II.
It’s a bold swing for the fences by the Jones Day and Holtzman Vogel legal teams, and it will be interesting to see what the District Court does when faced with the question, if only to see which analyses of Cruz were correct: the dismissive “it’s only post-election contributions at stake” or the aggressive “this is a fundamental shift in favor of free expression and the consideration of indirect harm to those limited by campaign finance restrictions.” Unlike many such cases, there’s a pretty straightforward evidentiary record that will be made on these facts, and here one that can’t be easily explained by any intervening “Trump factor.” The addition of individual defendants J.D. Vance, who won his race, and Steve Chabot, who lost, but both arguably supported Trump or at least some of his positions, may make the difference if the court treats the case as an as-applied challenge in light of Colorado II, but a facial challenge on the broader interpretation of FEC v. Cruz is still an uphill battle.
Why AFPF/TMLC v. Bonta Was Not Enough: The U.S. Supreme Court’s 2021 decision in Americans for Prosperity Foundation/Thomas More Law Center v. Bonta, 594 U.S. __, 141 S. Ct. 2373 (July 1, 2021), protected donors from “dragnet” sweeps for information required to be kept confidential by law. But Tim Hoefer, head of the Empire Center in New York, uses recent actions by the Office of the New York Attorney General which ignore the ruling as the basis for an op-ed in the New York Daily News explaining that taxpayers are still at risk for illegal leaks (h/t IFS). “This breach of constitutional privacy should concern every single New Yorker — especially because it stems from the office of the state’s top legal official. On the official attorney general’s office website, the AG boasts that her office ‘is charged with the statutory and common law powers to protect,’ among others, charitable donors. Where does it leave us if the top legal officer can’t enforce or follow the law?”
Where Does the Federalist Society Go Now? Will Rogers, cowboy humorist and author, wrote: “I am not a member of any organized political party — I am a Democrat.” The same could be said of many political parties at times, and now the same is claimed about the Federalist Society. Politico, as often happens these days, leads the media charge:
One of the society’s most prolific members, South Texas College of Law professor Josh Blackman, noticed that of the dozens of panel discussions — on topics including cancel culture and “social activism and corporate leadership” — none addressed the elephant in the room: the [then-]pending challenge to abortion rights, and how that could reshape both society and the conservative legal movement. “You get your white whale and what do you do? What’s the next thing?” said Blackman in an interview a few weeks ago while on his way to Federalist Society talks at three Boston-area law schools. “The answer is: I don’t know.”
The more likely answer is “lots of things, most of them the same as before Dobbs,” just like similar organizations in similar situations. The Politico article admits that “After all, skepticism about the right to abortion was part of the impetus for the founding of the society, back in 1982.” (Emphasis added.) The article has a good, though substantially incomplete, outsider’s view of the Federalist Society’s history and philosophy, best illustrated, to Politico’s credit, by later quoting Prof. Blackman diluting the story’s abortion hook: “The Federalist Society is not an ‘it.’ You have thousands of people with different approaches. Are there political people? Absolutely there are. But most academics tend to be libertarians rather than social conservatives.”
And during its early days, the tables at the monthly meetings at a downtown Mongolian restaurant were pretty segregated into groups: government officials, academics, libertarians, conservatives. Those of us whose practices crossed many of these borders sometimes hopped tables. FedSoc was, and still is, primarily a networking opportunity for most of its participants.
New California Pay-to-Play Law Kicks In January 2023: Venable has a new reminder about California’s new P2P law prohibiting those seeking or holding government licenses, contracts or permits (and their affiliates, employees and agents) from contributing more than $250 to a campaign for a local government official of the issuing agency. The new law expands the coverage and definitions of prior law.
FPPC Has No Bite, Says Los Angeles Times Editorial: California’s Fair Political Practices Commission is justly feared as a tenacious and aggressive speech regulator, willing to investigate and punish alleged campaign finance crimes on the flimsiest of rationales. But the FPPC has been too quiet lately, according to a Los Angeles Times editorial: “California political ethics watchdog is losing its bite.” The main complaint? “Lately, the commission has been taking so long to complete investigations that it’s losing power. It’s overloaded with old, unresolved cases and is not properly prioritizing those that need urgent attention. Elections come and go without answers. The watchdog has no bite.” FPPC staff say they are overworked, but the editorial dismisses mere administrative realities: “It shouldn’t be so hard for the commission and its staff to figure this out. The panel has existed since the 1970s, with effectiveness waxing and waning over time. Look back at what worked in the past and make it work again.” Meanwhile, Covington reports that the toothless FPPC has raised contribution and gift limits for 2023-24.
Hershey School Trust “Made” $1.8 Billion in 2022, Just By Holding On to Its Big Investment in Hershey Stock: With all the talk about billions passing from billionaires to charities and other tax-exempt organizations, it’s easy to overlook the good that’s come to some from simply holding on to their assets. The Milton Hershey School Trust, founded in 1909, is the biggest stockholder in the Hershey chocolate company, with $13 billion of stock, 28% of the total. Its wealth supports an orphanage and school for low-income children that have helped thousands of kids for over a century. Because the chocolate company has increased in value, as Investors’ Business Daily reports, so have the assets of the charity, up $1.8 billion in 2022.
Nate Persily Puts His “Law of Democracy” Lectures on YouTube: Prof. Nate Persily has put his Stanford class on “U.S. Law of Democracy” up on YouTube. From the colonial past to Bush v. Gore, Persily explores the statutory, constitutional, and judicial history of the law of elections and voting rights divided into 19 lectures of from 9 to 55 minutes long (most are around 25 minutes). Should be accessible to nonlawyers, and overall, a broad introduction to many complicated subjects.
George Orwell’s Six Rules for Good Prose: Prof. David Post repeats the famous author’s good advice on how to improve your writing:
- Never use a metaphor, simile, or other figure of speech which you are used to seeing in print.
- Never use a long word where a short one will do.
- If it is possible to cut a word out, always cut it out.
- Never use the passive where you can use the active.
- Never use a foreign phrase, a scientific word, or a jargon word if you can think of an everyday English equivalent.
- Break any of these rules sooner than say anything outright barbarous.