Author: barnabyzall

Public Policy Advocacy Highlights for December 2021

Public Policy Advocacy Highlights for December 2021

[PRELIMINARY NOTE: For more than a decade, the First Tuesday Lunch Group, made up of legal practitioners who are Democrats, Republicans, independents and non-partisans from across the United States, has met monthly to discuss current legal issues in tax-exempt organization, constitutional, and campaign finance law and developments in public advocacy. Participants represent diverse organizations, interests and views spanning the political spectrum – non-partisan, left, right, and center, sometimes in adversarial positions in the legal arena. Yet participants are united in our commitment to the rule of law. These non-partisan discussions help candidates, news media, government officials, and other Americans navigate difficult and complex federal laws.

There is no set FTLG agenda, but each month, a draft of possible topics for discussion, based on highlights of the prior month, is circulated; the actual FTLG discussions generally include only a few of these topics and often several other topics. This post includes only Barnaby Zall’s suggestions for possible topics and highlights, not those of the FTLG itself or its participants. This draft is intended for active FTLG participants, and thus includes abbreviations and references to government agencies or individuals, legal doctrines and terms, and other shorthand phrases or terms.]

DCRA Confusion: Jim Kahl’s question about conflicting information from DCRA about registering foreign corporations from states whose laws differ from D.C.’s. Can foreign corporations register to do business in D.C. with fewer than three directors?

DoJ ANPRM on FARA: Reminder: the clock is ticking on sending comments to DoJ on its ANPRM on reforms and changes needed to FARA.

IRS EO Reminders: Tax-exempt organizations affected by Hurricane Ida have until February 15, 2022 to file various tax and information returns and make tax payments. TEOS is now the only page for Service exempt org info. 1024’s going electronic in 2022. Nice summary from Proskauer on new requirements for LLCs that want c3 status. Announcement 2021-18 revokes 2001 guidance that allowed penalty waivers when payments to management companies were reported on Form 990 rather than reporting the compensation paid to the person(s) who provided services to the tax-exempt organization on behalf of that management company; now everyone must follow the 990 instructions for each type of 990, so that persons who should be listed in the compensation section may be individually listed and not hidden in a blanket payment to a management company.

New FEC Leadership: Long-time FTLG participant Allen Dickerson has been elected Chair for 2022, and Steven Walther was elected Vice-Chair.

Short Codes: No FEC action on whether “short code” texts are public communications (discussed at a recent FTLG lunch). AOR 2021-11.

D.C.D.C. Reverses Earlier Decision and Denies Standing to Challenge FEC Inaction: On Dec. 30, Judge Cooper reconsidered and reversed an earlier decision in CLC v. FEC/Right to Rise Super PAC, No. 20-CV-00730 (CRC), Dec. 30, 2021. The earlier decision in February dismissed Right to Rise’s challenge to the Complainants’ standing, though it did agree with RTR that the Complaint failed to state a claim under the APA. In Thursday’s decision, Judge Cooper “the court will grant RTR’s motion for reconsideration, and, finding that it lacks subject matter jurisdiction, dismiss the case and deny plaintiffs’ motion for a default judgment against the FEC.” Slip op., 1. The dismissal was based on the Plaintiffs’ speculation about whether there was more pre-candidacy announcement “testing the waters” expenditures than were disclosed on the PAC’s initial FEC filing. This is similar to an issue raised in Cruz for Senate v. FEC, No. 21-12: a court cannot “accept[] mere conjecture as adequate to carry a First Amendment burden.” McCutcheon, 572 U.S. at 210.

Removing Redactions Exposes Why FEC Could Not Act: Rick Hasen writes: “After Republican commissioners delayed consideration of the matter, FEC Commissioner Petersen recused himself once he accepted a post-FEC job at Holtzman Vogel, depriving the FEC of a quorum.” Unredacted Giffords v. FEC opinion.

Media Coverage Complaining About Consulting Legal Counsel: As long as we’re talking about Holtzman Vogel Josefiak Torchinsky, the Daily Beast notes the activity of various HVJT heavy-hitters in the Kanye West 2020 campaign for President. Many of us in the FTLG, including Barnaby Zall, have counseled not only Presidential candidates from both parties, but also losers and long-shots, without being called out for it. A more balanced piece on long-time FTLG member Cleta Mitchell in TPM points to her long legal counseling career as a good thing (although it doesn’t mention her background as a Democratic legislator): “But Mitchell also has institutional cred among conservatives that goes back decades, the kind of swing that can land you a post-insurrection seat on a government elections advisory board without much public fuss, even during the Biden administration.”

Supremes Consider Corruption: Briefing is almost complete for Ted Cruz for Senate v. FEC, No. 21-12, to be argued on January 19. The case nominally involves whether a limit on using post-election contributions to repay candidate loans to their campaign committees one of the few remaining provisions of BCRA, but also raises several other questions, including the evidence required to find an “appearance of corruption,” one of the few areas in which First Amendment rights can be limited because they are unpopular. A cert petition was filed in Roberson v. U.S., No. 21-605, asking a similar question with more emphasis on the exempt organization side: “Whether, in a bribery prosecution based on issue-advocacy payments that would otherwise enjoy First Amendment protection, the government must prove that the payments were explicitly linked to official action.”

Supreme Court Commission (cont.): Not much media coverage of the concurring reports from the few independent members of the recent Biden Commission on changing the Supreme Court. Prof. Will Baude reprints a couple (limited to 800 words each).

Senators Complain About Conservative Organizations Filing Amicus Briefs: Sens. Whitehouse, Blumenthal and Hirono file “AMICUS Act,” a bill requiring disclosure of donors to organizations filing amicus briefs in the Supreme Court. Meanwhile, Brian Klaas, a professor from University College, London, urges “defund[ing] donors” to “authoritarians.”

Dems and Transparency: Meanwhile, are Dems moving on from “transparency” as a top priority? Rachel Cohen at American Prospect says so. (If you’re paywalled, see these excerpts from Rick Pildes’ blog post at ELB.) “more quietly, leaders in the progressive fundraising world will admit that transparency is just not a serious priority anymore … This isn’t new, and the Democratic Party in particular has been making itself more easily swayed by the whims of the wealthy ever since the early 1980s, when Rep. Tony Coelho took over the Democratic Congressional Campaign Committee and established new direct lines of communication between corporate donors and members of Congress. … As progressive groups grow more dependent on rich donors who’d like to keep their contributions private, liberals find themselves contorting into awkward positions to justify the status quo, insisting groups that are clearly affiliated with the Democratic Party are not, in fact, partisan.” From the other side, is donor privacy ok for Mackenzie Bezos but not for others? An article in City Journal discusses the value of donor privacy.

Cops Surveil Portland Protestors: (should Portland Protestors be a recurring topic?) Is police/FBI surveillance of active protests where violence is taking place a violation of the first Amendment? The New York Times and activists appear to say yes. Asked about FBI agents watching from within a protest in Portland, Oregon, “Mike German, a former FBI special agent who specialized in domestic terrorism and covert operations and is now a fellow at the Brennan Center for Justice, said that such surveillance operations inherently run the risk of violating First Amendment rights.”

Change 1st and 2nd Amendments? In the wake of Justice Kavanaugh’s comments about the “neutrality” of the Court in the abortion cases, others have suggested changes to various parts of the Bill of Rights. A Boston Globe op-ed by Mary Ann Franks, a professor at Univ. of Miami Law School, suggests “explicitly situating individual rights within the framework of ‘domestic tranquility’ and the ‘general welfare’ set out in the Constitution’s preamble” to prevent the First and Second Amendments from “being read in isolation from the Constitution as a whole and from its commitments to equality and the collective good. The First and Second Amendments tend to be interpreted in aggressively individualistic ways that ignore the reality of conflict among competing rights. This in turn allows the most powerful members of society to reap the benefits of these constitutional rights at the expense of vulnerable groups.”

CounterMajoritarianism vs. the Constitution: Dueling professors in the Cal.L.Rev. Franita Tolson explains the dilemma: “Writing about the countermajoritarian difficulty is a rite of passage for constitutional law scholars.” Pam Karlan says “we’re all going to die,” Will Baude says “a feature, not a bug,” and Nick Stephanopoulos says “we can Guarantee [Clause] this problem.” 

Gangs and PACs? Real, Chicago-type organized gangs (in Chicago), running PACs and candidates for office? New book says yep, and Rick Pildes is intrigued.

PPLI and National Taxpayers Union Foundation file Friend of the Court brief asking U.S. Supreme Court to protect privacy for donors to charities

PPLI and National Taxpayers Union Foundation file Friend of the Court brief asking U.S. Supreme Court to protect privacy for donors to charities

On February 26, 2021, the Public Policy Legal Institute and the National Taxpayers Union Foundation filed a friend of the court (amici curiae) brief in the consolidated cases of Americans for Prosperity Foundation v. Becerra, No. 19-251, and Thomas More Legal Center v. Becerra, No. 19-255. Both these cases involve demands by the California Attorney General for an obscure federal tax form listing major donors to charities. The two charities contend that the Attorney General’s demands violate the First Amendment rights of association; the Attorney General contends that he needs to collect the form from all charities that want to operate or fundraise in California in order to find and prosecute those who want to misuse the charities.

The PPLI/NTUF amici brief takes a different approach from most of the briefs filed in this case, which directly discuss the First Amendment issues and precedents. The new brief points out that this case is not just about the First Amendment, but also about the Sixteenth Amendment, which grants government very broad powers to collect income taxes, but must also respect taxpayer privacy. In other words, it’s not just the rights of donors, but also the need for government to protect the American tradition of voluntary tax compliance, which is the highest in the world. One of the reasons President Richard Nixon resigned was his misuse of the Internal Revenue Service; in the wake of Nixon’s “enemies list,” Congress passed strong privacy protections for taxpayers, including donors to charities. Ignoring those privacy protections undercuts taxpayer confidence.

The Attorney General’s plan to use charities’ donor lists to tilt at “dark money” windmills risks slaying the voluntary tax compliance goose that lays the golden eggs

The brief also addresses an over-reach in which the federal government argued that it could withhold First Amendment rights if a “public subsidy” was involved. In these cases, the Attorney General argued that it could require the charities to give up their donors’ names and addresses as a condition of being exempt from taxes. But that position is an overstatement of a long-standing line of “public subsidy” cases, with the most recent case handed down just last year. Only Congress, not the Attorney General, can pass a law requiring such a condition, and then only within specific limits. The “public subsidy” argument does not mean that charities must surrender all constitutional rights in order to get a tax subsidy, and the Attorney General’s demand for donor identification falls far short of the tests used to see if such conditions are constitutional.

The Attorney General should not be able to leverage an arguably legitimate use of Schedule B into a condition on an endless array of constitutional rights

The Summary of Argument from the PPLI/NTUF amici brief says:

These cases involve the First Amendment, but this is not just a First Amendment case. These cases are also, at heart, about taxpayer confidence, and its effect on government and society.

Respondent Attorney General of California, according to a letter dated December 9, 2019 and also signed by 19 other attorneys general, seeks to use charities’ donor information against “corporations, wealthy individuals, and special interests [who] seek to influence politics without leaving fingerprints.” The use of donor lists and other taxpayer information for non-tax purposes is the reason Congress enacted extensive tax privacy provisions after President Nixon’s misuse of the IRS. Ignoring the lessons taught by the federal experience could cause the revival of “enemies lists,” undercut the taxpayer confidence that underlies the world’s highest voluntary tax compliance rate, and reverse long-standing donor privacy rights.

Schedule B to IRS Form 990, the obscure tax form sought here, was never intended to be used to uncover wrongdoing; it was created in 2000 to protect donor information against leaks. It immediately failed, as it leaked again and “opposition researchers” discovered it as a rich source of donor information.

Nor is Schedule B useful for the purposes sought by the Attorney General, compared to the rich data available from Form 990. For twenty years, the IRS has tested Schedule B’s general questions against the more detailed and targeted information obtained on the publicly-available Form 990. The result is that the IRS no longer uses Schedule B. Nor do 47 states. Schedule B simply can’t be used, where Form 990 offers precisely what the IRS and the Attorney General seek. The IRS has been trying to get rid of Schedule B since 2016.

The same is true of any similar use of donor lists in the absence of the type of particularized evidence of wrongdoing the Form 990 was designed to uncover. To find wrongdoing, there are efficient and effective ways of identifying problem areas; Schedule B and other donor lists generally are neither efficient nor effective, especially compared to their propensity to leak. Advance mass collection of donor lists undermines taxpayer confidence that is essential to support government, especially if it is merely politicians tilting ineffectually at campaign finance windmills.

The contention in the amicus brief for the United States that “the disclosure of a group’s donors, when imposed as a condition of administering a voluntary governmental benefit program or similar administrative scheme, is not a compelled disclosure subject to exacting scrutiny or the narrow-tailoring requirement” is an overstatement and a misreading of this Court’s decisions. This Court has held that the condition may not be on the recipient as a whole, but only on a statutorily-defined program. The condition may not prohibit the recipient from conducting its activities using “private” money, and it may not be so burdensome that the organization cannot function. Language that suggests otherwise, such as in Regan v. Taxation With Representation, 461 U.S. 540 (1983), should be clarified. Among other things, this characterization ignores the special role of donor lists, the varied interests underpinning the tax system, and taxpayer confidence.

Finally, the lower court misunderstood how federal tax privacy protections operate and their effect. While the court below believed that the “risk of inadvertent disclosure of any Schedule B information in the future is small,” the Attorney General’s failure to provide even basic protections such as tracking and logging those who accessed the donor information means that the Attorney General wouldn’t even know when the protected information leaked.

This Court long ago established that the First Amendment bars the Attorney General here. The Court should reverse the decision below.

To see a copy of the amici brief, click here:

Can You Paint A Slogan On City Streets?

Can You Paint A Slogan On City Streets?

Last summer, street mural painting became a very big legal controversy. Can you paint a popular, but unofficial slogan on city streets? After all, huge “Black Lives Matter” slogans appeared on city streets across the country.

On February 18, 2021, Judge Lorna Schofield of the U.S. District Court for the Southern District of New York handed down a decision in Women for America First v. DeBlasio, which denied a request to paint a mural on a Brooklyn street conveying a different message (“Engaging, Inspiring and Empowering Women to Make a Difference!”) from a recent “Black Lives Matter” mural which had been painted by private citizens, but then “adopted” by New York City’s Mayor Bill DeBlasio. Judge Schofield said that, though the original BLM painters had been private, the Mayor’s adoption of the street painting (and expanding painting to all five boroughs) was an endorsement sufficient to convert the original mural into government speech. “The New York City government preserved the Murals and played a role in the creation of the six later murals.” Slip Op. 3.

But ordinarily, no. And the reason why is complicated, because sometimes the answer is yes. It matters whether you’re asking about sloganeering in the streets or on the streets. And it matters who is doing the painting: private citizens or the city. And it matters if the city adopts the painted slogan, even after the fact, as its own “government speech.”

As the Supreme Court noted in Waters v. Churchill (1994), when the government acts as a sovereign to regulate private speech, it has far less power than when it acts as employer or as speaker, both of which involve its own speech or at least the public perception that it is the government speaking. That is the point of the First Amendment. But the closer speech is to core governmental functions, the more power the government has to regulate it. The classic example of this “speech spectrum” is government employees’ speech: the more the employees’ speech looks like the government’s own speech, the greater the government’s ability to regulate. As the Supreme Court said in 1995 in Rosenberger v. Rector of Univ. of Virginia, “when the State is the speaker, it may make content-based choices.”

So, can anyone paint on a city street? No. Think “in” vs. “on” the street. Streets are traditionally open “public fora,” where speech in the street is expected and protected, as the Supreme Court noted in 2009’s Pleasant Grove City, Utah v. Summum decision. But, the surface of the street is not a public forum. Slick, bright paint on streets can cause accidents and confuse drivers. So, Judge Schofield pointed out, “New York City does not generally permit private citizens to paint on streets open to traffic.”

The plaintiffs contended that allowing the BLM mural to remain on the street turned the street from a non-public to a public forum. But converting a non-traditional forum into a public one requires an intentional act for that purpose. Walker v. Tex. Div., Sons of
Confederate Veterans, Inc.
(2015). New York City did not intentionally convert the street surface into a public forum for slogans. Government’s silence or even some limited disclosure is not enough to convert a forum into an open, public one. And a government adopting, paying for, or endorsing someone else’s speech as the government’s own speech does not convert the forum either (in fact, this type of First Amendment “forum analysis” does not apply to government speech in the first place).

So, do people have a right to force the government to speak their message? They do, but not by painting on public streets. They do it at the ballot box. As the Supreme Court said in Walker, “it is the democratic electoral process that first and foremost provides a check on government speech”, not the First Amendment.

Bottom line: you ordinarily don’t have a right to paint your slogan on the street. That’s for safety reasons. That said, you can paint on a street’s surface, if you can get your friendly government to adopt your slogan as its own. And you do that through the First Amendment’s rights of public policy advocacy, assembly and petition, or the ballot box, not by asking a court to force government speech.

In First Amendment Cases, Timing and Precision Matter, Even During A Pandemic

In First Amendment Cases, Timing and Precision Matter, Even During A Pandemic

Shortly before midnight on November 25, a fractured Supreme Court of the United States in Roman Catholic Diocese of Brooklyn v. Cuomo temporarily blocked New York state pandemic rules on attendance at churches and synagogues. New York Governor Andrew Cuomo scoffed at the ruling: “It doesn’t have any practical effects.”

Contrary to Gov. Cuomo’s shrug, the Diocese of Brooklyn decision does have practical effects on government officials who draft pandemic rules and litigants who challenge them. Simply put, both rules and challenges must be as “precise and as narrow as possible.” Because the Supreme Court has just reminded courts to look for that narrow precision.

The First Amendment balances societal needs against free expression rights, even during an emergency. In a crisis, governments want to act quickly and broadly, but the courts are not going to ignore the First Amendment when governments say “trust us.” Timing and precision matter both in drafting the government’s rules and in challenging them.

Or as the Supreme Court majority put it: “Members of this Court are not public health experts, and we should respect the judgment of those with special expertise and responsibility in this area. But even in a pandemic, the Constitution cannot be put away and forgotten.” And Justice Kavanaugh pointed out: “judicial deference in an emergency or a crisis does not mean wholesale judicial abdication, especially when important questions of religious discrimination, racial discrimination, free speech, or the like are raised.”

To see how this works, look at three different cases, all involving Free Exercise challenges to pandemic rules: Last May, in South Bay United Pentecostal Church v. Newsom, the Court refused to block California’s rules that prohibited church attendance of more than 100 people. Last week, in Diocese of Brooklyn, the Court blocked similar rules. Three days later, in Spell v. Edwards, Justice Alito, a member of the majority in Diocese of Brooklyn, denied a church’s request to block similar Louisiana rules, without even asking for opposing briefs. Why the difference? Timing and precision in the rules and the challenges.

The basic rule at play in Diocese of Brooklyn is when “the challenged restrictions are not ‘neutral’ and of ‘general applicability,’ they must satisfy ‘strict scrutiny,’ and this means that they must be ‘narrowly tailored’ to serve a ‘compelling’ state interest.” These complex analyses apply differently at different times: early in a crisis, when information is scarce and the need for some action is urgent, the government gets more leeway than later in a crisis when much more is known and interim steps can provide some relief even if a final remedy is not yet available.

That is the difference between Diocese of Brooklyn and other decisions that permitted governments to impose more sweeping restrictions. By now, the religious institutions challenging the rules have had months to comply with changing scientific and medical recommendations, and, according to the trial judge here (whose judgements are not easily deflected at this preliminary stage), have done an exemplary job. The Court simply told government officials that expectations of more careful and precise drafting and enforcement are growing ever stronger. The same evolution has occurred in recent cases involving protests and riots in American cities over the last few months; earlier decisions gave more deference to law enforcement, while later decisions have been more nuanced in applying the First Amendment’s right of peaceable assembly.

That careful level of precision and evidence in First Amendment questions is the principal lesson for rules drafters and challengers alike in Diocese of Brooklyn. Even briefs from the American Medical Association and other groups with statistical projections were not enough to convince the Court that the unrefuted records of plaintiffs’ compliance and lack of infections should be disregarded. And, though New York argued that it had moved those neighborhoods into a less restrictive set of pandemic rules, the state refused to say that it wouldn’t ignore that required level of precision in the future.

So, what is the required level of precision? The first rule is “don’t speculate.” In Federal Election Commission v. McCutcheon, the Court said: “we have never accepted mere conjecture as adequate to carry a First Amendment burden.” That’s hard with a novel virus, but there must be some actual evidence that the speculative justification is soundly based, not too broad, and applicable to each person or entity subject to the proposed rule. And challengers must demonstrate, with a reasonable proffer of proof, that they are outside the justification, but were included anyway.

In other words, not “let us out because we’re religious,” but “let us out because we, specifically, don’t represent the danger you are addressing.” Which was amply demonstrated in Spell v. Edwards, when the Louisiana church unsuccessfully argued an overly-broad legal theory: “The First Amendment places the decision of whether to assemble solely within the jurisdiction of the church, not the State.” Diocese of Brooklyn does not create new exemptions for religious institutions; it simply requires careful consideration of existing and new standards. Even in a pandemic.

As National Review editorialized: “all the Court does is reiterate the law. Americans have a right to worship as they see fit, and the government may encroach on that right only in limited circumstances, which don’t include targeting churches for unjustifiably poor treatment the way Cuomo’s rules do.”

It is possible to draft such precise rules without unduly infringing on constitutional rights. For example, Washington state Governor Jay Inslee recently released a new restriction on medical and dental elective surgeries, which was eight, single-spaced pages long, with numerous provisions tying restrictions to specific local conditions. This rule will likely require onerous legal and medical judgments in fashioning compliance standards, but is also more likely to survive constitutional challenge than New York’s rule that exempted “big box” stores but not synagogues without considering compliance with health rules in those facilities. After Spell v. Edwards, Louisiana Gov. John Bel Edwards issued a statement pointing out how carefully he considered the effect of his proposed rule on churches.

This is not a new requirement or one limited to Free Exercise cases; on Thanksgiving Day, the Third Circuit Court of Appeals rejected the Trump re-election campaign’s challenge to Pennsylvania vote counting methods essentially because of a failure to provide specific evidence. Thus, Diocese of Brooklyn repeats what the Court has long required when governments seek emergency powers that contravene the First Amendment: “if you ask us to trust you in a crisis, we may give you more leeway in your rulemaking and enforcement at the beginning, but be very careful and precise as the crisis proceeds.”