Note: the painting above is of the statue Spirit of Justice, which stands in the Great Hall of the U.S. Department of Justice.

THE INDICTMENT OF A FORMER PRESIDENT:

The Trump Indictment For January 6-Related Activities and Conspiracies is Filed; Implications for the First Amendment: Copy of the 45-page J6 indictment is available here. Six co-conspirators, who seem to be lawyers and others, are noted, but not charged. Nothing really new that hasn’t been in the media for some time. Washington Post coverage. Law Prof. Rick Hasen writes in Slate:

It is perhaps the most important indictment ever handed down to safeguard American democracy and the rule of law in any U.S. court against anyone.

Professor Rick Hasen, Slate, August 1, 2023

The First Amendment will be an issue in this case, as noted in Paragraph 3 of the Indictment: “the Defendant has a right, like every American, to speak publicly about the election and even to claim, falsely, that there had been outcome-determinative fraud during the election that he had won.” Law Prof. Ilya Somin writes in Reason: “It is important to recognize that Trump isn’t being charged simply because he wrongly claimed he won the election. In and of itself, that is no crime. Rather, he went far beyond that and organized a wide-ranging conspiracy to overturn the result using fraud and deception, and by attempting to enlist state and federal officials to assist him. The indictment goes into the means he and his co-conspirators used, in great detail.”

Want the Trump lawyers first public response? Watch this clip on CNN, helpfully republished by RealClearPolitics. It rests on the First Amendment: “”Political speech, under the First Amendment, has an almost absolute protection. Nobody gets to judge, whether it’s true or not, except the American people. And we do that in an election. We do that in an election. We do that in the case of a President, by impeachment. But we don’t indict people for speech,” said Trump lawyer John Lauro.  Alleged co-conspirator Rudy Guiliani was irate in interviews, trying to claim a First Amendment defense.

This J6 Indictment, If Successfully Prosecuted, May Not Bar Trump’s Candidacy or New Federal Office: Law Prof. Josh Blackman writes in Reason that it is important to note what the J6 indictment did NOT include:

The most significant omission was that Trump was not indicted for insurrection, 18 U.S.C. § 2383. This decision was not particularly surprising, since none of the January 6 defendants have been charged with insurrection. Stuart Rhodes and the Proud Boys were convicted of seditious conspiracy. Federal prosecutions for insurrection are extremely rare, and there were many open questions about how to obtain a conviction. The decision not to seek an indictment for insurrection has several immediate consequences. First, the punishment for violating Section 2383 includes being “incapable of holding any office under the United States.” … Now that Smith has not indicted Trump for violating this statute, we will not need to decide the scope of Section 2383.

Prof. Josh Blackman, Reason, Aug. 1, 2023

Various tax-exempt organizations have been preparing actively to file court challenges to Trump candidacies based on what they claim are likely insurrection convictions. For example, even before the indictment was released, CREW has issued an 88-page report calling for Trump’s “disqualification” from the ballot. Free Speech for People sent letters to nine States’ officials urging them to “bar former President Donald Trump from the ballot.”

The obvious problem with that approach is that it assumes that, absent Section 2383 or some other statutory provision, those State officials have standing under federal law to file those challenges; FSFP contends they do because they aren’t barred by the Constitution: “nothing in the text, original public meaning, or the Reconstruction-era history of Section 3’s implementation suggests that states need authorization from Congress to implement this part of the Constitution.” While creative, saying that there’s nothing in the Constitution requiring Congressional authority to sue is not really a useful answer for standing analysis, which is always a threshold question in any federal litigation. Standing stems from the Constitution’s requirement that federal courts must handle only concrete and remediable “cases and controversies” and not hypothetical questions, and, greatly simplified, demonstrating standing requires that the challenger show a concrete and immediate harm that can be remedied by the action proposed, and that is not shared by numerous others. Standing can be challenged at any point in litigation, and courts can raise a standing question sua sponte even if the parties do not.  

None of these efforts seem to grapple with the Supreme Court’s decision in U.S. Term Limits v. Thornton, 514 U.S. 779 (1995)(States cannot impose new qualifications on federal candidates because it would disrupt national uniformity of representation), or the many “natural-born” challenges to Presidential candidates Barack Obama and John McCain. See, e.g., Law Prof. Derek Muller’s 2015 Indiana Law Journal article on Federal Electoral Qualifications, summarizing cases. Blocking Trump from the ballot may be a rough road to follow, and will certainly not be done quickly. Stay tuned.

GOVERNMENT CENSORSHIP OF ALLEGED “DISINFORMATION:”

Appeals Court Stays Missouri v. Biden Injunction Until Panel Can Review DoJ Appeal Motion; Hearing on August 10:

The historic case of State of Missouri v. Joseph Biden, No. 3:22-cv-01213-TAD-KDM, July 4, 2023, W.D.La., rolls forward, as Judge Terry Doughty rejected the Defendants’ Motion to Stay the Injunction in a 13-page July 10 Memorandum Opinion, and then a panel of the U.S. Court of Appeals for the Fifth Circuit stayed the injunction temporarily pending an Aug. 10 hearing by a different 5^th Circuit panel.

In his July 10 Mem. Op., Judge Doughty said: “As discussed in detail in the Memorandum Ruling, all of the Defendants likely ‘significantly encouraged’ and/or ‘jointly participated’ with the social media companies to engage in viewpoint-based suppression of protected free speech. Additionally, the White House Defendants and the Surgeon General Defendants were found to have likely engaged in coercion of social-media companies.” Id., at 3. The Mem. Op. included an additional four pages of review of “a few examples of actions taken by Defendants that demonstrate they are unlikely to succeed on the merits.” Id., at 3-7. The Mem. Op. notes that “The Defendants are asking the Court to grant them relief to a Preliminary Injunction that only bars illegal conduct. In other words, the only effect of staying the Preliminary Injunction would be to free Defendants to urge, encourage, pressure, or induce the removal, deletion, suppression, or reduction of content containing protected free speech on social-media platforms.” Id., at 9.

The Mem. Op. also addressed the government speech question directly: “The portion of the Memorandum Ruling addressing Defendants’ government speech argument clearly notes that the government speech was not a First Amendment violation. Rather, it was the use of government agencies and employees to coerce and/or significantly encourage social-media platforms to suppress free speech on their platforms. Therefore, the government speech exception in the Preliminary Injunction is not ambiguous or vague.” Id., at 11. 

Stanford Law Prof. Michael McConnell, who co-chairs Meta’s Advisory Group on disinformation, wrote in the Washington Post that the answer is really transparency about the contacts between government and private social media companies, part of a charm offensive by Meta advisors to promote their proposed resolution:

The political world responded in its usual bipolar way: one side cheering the court for shutting down what the court called an “Orwellian ‘Ministry of Truth,’” and the other side warning of the waves of disinformation that will spew out of social media if the government does not work with social media companies to identify and suppress what it regards as “misinformation” and “disinformation.” …

The trouble is that the line between lawful government suasion and unlawful government coercion is paper-thin. In a world where government agencies wield significant discretionary regulatory authority, media companies might be fearful of government disfavor if they do not comply with government requests, even absent direct threats. Conversely, it seems likely that, in many cases, the companies were happy to cooperate, sharing the underlying values and goals of the administration in power. Company executives are likely to testify that they acted in accord with their own judgment — making the case for government coercion difficult to prove. …

Still, the district court’s summary of the evidence and allegations in the case performed a public service. Most of the government actions reported in the decision were performed in secret, and became public only as a result of discovery in the case. Few Americans could have known just how frequent and extensive were the government’s efforts to influence what could be said over social media. …

Regardless of how the judge’s order fares on appeal, a practical solution exists that might defuse the matter: Social media platforms should make government takedown requests public.

Meanwhile, critics of the injunction told The Washington Post that the injunction will disrupt governmental and private efforts to block foreign interference and other “disinformation” about the 2024 election. Law Professors Leah Litman and Larry Tribe wrote in Just Security: “Invoking the First Amendment, a single district court judge effectively issued a prior restraint on large swaths of speech, cutting short an essential dialogue between the government and social media companies about online speech and potentially lethal misinformation. Compounding that error, the district court crafted its injunction to apply to myriad high-ranking officials in the Biden administration, raising grave separation of powers concerns.”

Before the second Fifth Circuit panel considering the application for an Emergency Stay, the Department of Justice filed an Emergency Motion for a Stay:

One of the central prerogatives of the President and Executive Branch officials is to speak to members of the American public—including American companies— about how they can help mitigate threats to the Nation. … While the government may not coerce private parties to act on its behalf to achieve indirectly what it could not do directly, courts have set a high threshold for finding such coercion to give the government sufficient latitude to “advocate and defend its own policies.”  Board of Regents of the Univ. of Wis. Sys. v. Southworth, 529 U.S. 217, 229 (2000).

Here, however, the district court issued a universal injunction with sweeping language that could be read to prohibit (among other things) virtually any government communication directed at social-media platforms regarding content moderation.  The court’s belief that the injunction forbids only unconstitutional conduct, while protecting the government’s lawful prerogatives, rested on a fundamentally erroneous conception of the First Amendment, and the court’s effort to tailor the injunction through a series of carveouts cured neither the injunction’s overbreadth nor its vagueness.

Id., at 4-5.

The Plaintiffs’ Opposition to the Motion to Stay responded:

In 82 pages of detailed factual findings—which Defendants-Appellants hardly dispute—the district court found that federal officials have covertly injected themselves into the content-moderation decisions of all major social-media platforms, through a years-long campaign of threats, “unrelenting pressure,” collusion, and deceit.  …

This campaign targets specific speakers—especially influential critics of the Administration’s policies and those who organize political opposition to them, … It also targets specific viewpoints on hotly disputed issues … This federal censorship fundamentally distorts online discourse in America by silencing influential speakers and rendering entire viewpoints—specifically, those disfavored by federal officials—unspeakable on social media.  In undisputed findings, the district court found, again and again, that federal action causes the censorship of these speakers and viewpoints—i.e., absent federal action, the platforms would not have censored them. …

Defendants … argue that the injunction will interfere with legitimate forms of government speech.  But, in the district court, they spent months attempting to identify such concerns and submitted five declarations detailing such concerns from senior federal officials.  The district court carefully addressed these concerns by providing eight specific, comprehensive exclusions to the injunction to allow full latitude for legitimate government speech.  Now, instead of relying on those declarations, they raise a tiny handful of new, speculative hypotheticals, none of which poses a legitimate problem of application. In any balance, the government-induced silencing of millions of American voices on social media overwhelms this tiny handful of chimerical concerns about the Government’s own speech.

Id., at 7-9.

The Department of Justice kept up the flood of paper (already thousands of pages long) with a Reply to the Plaintiffs’ Opposition which argued a lack of standing to maintain the case: “Like the district court, plaintiffs err by confusing persuasion with coercion and making factual assertions that are unmoored from the record. … The problem with terms like ‘permissible public government speech’ is not that dictionaries fail to define those words; it is that a government official would have no clue what speech qualifies as ‘permissible.’” Id., at 3-4.

Then, the DoJ filed a 65-page Opening Brief before the second panel, relying on a few pre-2023 citations to the dangers of misinformation in social media, repeating in more detail what they said in their motion: “One of the central obligations of government leaders, at any level, is to protect the public against innumerable threats: natural disasters, outbreaks of disease, crime, economic turmoil, and much more.  Governments have concrete tools to address some of these challenges.  But often, one of the government’s key roles is simply to provide the public with accurate and timely information, to dispel false rumors, and to explain what actions citizens and businesses can and should take to advance the public good.”

The two sides both raise the same issue the U.S. Supreme Court addressed in Bantam Books, Inc. v. Sullivan, 372 U.S. 58 (1963): was the government official attempting to “convince” or “coerce” the private speaker? Plaintiffs point to the huge number of examples in the District Court’s record to the officials’ continuing pressure and subtle or overt threats and denunciations (in other words, what is now being called “jawboning” the private officials); DoJ looks only at whether an actual express threat was offered. Each claims that its approach satisfies Bantam Books’s holistic approach of considering the context of the officials’ speech. This is the standard fight in such cases, and there are an increasing number of such cases in recent months.  

The deadline for filing amicus briefs supporting the government or neither party was July 28. The Electronic Frontier Foundation, long involved in these cases, filed a brief supporting neither party (h/t IFS), arguing that, because the government needs the ability to express its own position forcefully, the appeals court needed to perform a searching review of each situation alleged to violate the First Amendment. “Government co-option of the content moderation systems of social media companies is a serious threat to freedom of speech; but there are clearly times when it is permissible, appropriate, and even good public policy for government agencies and officials to noncoercively communicate with social media companies about the user speech they publish on their sites.” Id., at 2. While the EFF brief does a nice job of summarizing the law and giving illustrations, generally, suggestions that appeals courts undertake extensive factual reviews fall on deaf ears, especially in an expedited review case. That’s the trial courts’ job.

Twenty-one Democratic State Attorneys General, led by New York State Attorney General Leticia James, filed a brief supporting the DoJ position (h/t IFS): “Amici States’ experiences demonstrate that information-sharing and communication between the government and social-media companies on topics such as child safety, consumer protection, and election integrity is mutually beneficial. And where, as in the federal defendants’ case, it is purely recommendatory and non-coercive, the communications further the public interest and fully comport with the First Amendment.” Id., at 2-3. The brief fails to note that the federal procedural rules require that, at this preliminary stage, the Plaintiffs’ allegations generally must be accepted as pled, not contested on conclusory grounds that they are “purely … non-coercive.” But perhaps that is a consideration only for lawyers, not for elected Attorneys General and their staffs.

House Judiciary Committee Chair Releases More Examples of Government Officials’ Badgering Social Media Companies: Meanwhile, Jim Jordan, Chairman of the House Judiciary Committee, tweeted a series of disclosures of new subpoena responses from Facebook/Meta showing White House officials pressing the social media giant to censor content. GWU Law Prof. Jonathan Turley describes in The Hill some of the jokes that White House officials tried to suppress as disinformation, including:

Now we know that Facebook executives were facing the same insatiable government desire for censorship. In an April 2021 email, Nick Clegg, Facebook’s president for global affairs, wrote to colleagues that Andy Slavitt, a senior adviser to Biden who was steering COVID-19 policy, “was outraged — not too strong a word to describe his reaction — that [Facebook] did not remove this post.”  

The post was actually a humorous meme shared by a user named Timothy McComas. It featured actor Leonardo DiCaprio’s character from the film “Once Upon a Time…in Hollywood,” pointing at a TV with a beer and cigarette in hand. The caption read: “10 years from now, you will be watching TV and hear…. ‘Did you or a loved one take the COVID vaccine? You may be entitled…’”

The Wall Street Journal (paywall) and Forbes have more details, but it’s just more (and more damning) evidence of relentless pressure on social media companies. Matt Taibi, one of the authors of the earlier Twitter internal files coverage comments on the “Facebook Files” disclosures: “News outlets wail about ‘disinformation’ when they’re aware the public has tuned them out. When people don’t listen to reporters, it’s usually because they suck. … A more embarrassing outcome for our business would be hard to imagine.”

Massive Study Suggests Changing Facebook’s Algorithm Will Not Change Political Beliefs: Speaking of Facebook, back in 2020, it commissioned a big study of whether the content that its algorithms directed to customers actually made a difference in political beliefs. The study was conducted by academic researchers and released in four tranches in the journals Science and Nature on July 27. The Washington Post reports that the first results of that study “show that the company’s platforms play a critical role in funneling users to partisan information with which they are likely to agree. But the results cast doubt on assumptions that the strategies Meta could use to discourage virality and engagement on its social networks would substantially affect people’s political beliefs.”

For example, the article “Like-minded sources on Facebook are prevalent but not polarizing,” in Nature reports that:

Here we present data from 2020 for the entire population of active adult Facebook users in the USA … We found that the intervention increased their exposure to content from cross-cutting sources and decreased exposure to uncivil language, but had no measurable effects on eight preregistered attitudinal measures such as affective polarization, ideological extremity, candidate evaluations and belief in false claims. These precisely estimated results suggest that although exposure to content from like-minded sources on social media is common, reducing its prevalence during the 2020 US presidential election did not correspondingly reduce polarization in beliefs or attitudes.

Pew Research Center Reports Big Divide Between Democrats and Republicans Over Government Censorship Claims: A new Pew Research Center poll found that a much higher percentage of Democrats than Republicans support government efforts to censor “misinformation” online. Law Prof. Eugene Volokh shrugged about the finding: “Unsurprising, it seems to me: People’s views on the question likely depends on how much you trust the U.S. government’s judgment of what is “false information,” and Democrats today trust it more than do Republicans.”

Does A C4’s Guilty Plea To Being Used For Bribery Justify Government Officials’ Silencing Tax-Exempt Organizations’ Speech: Forbes has an op-ed discussing Generation Now, a 501(c)(4) social welfare organization which pled guilty to racketeering for funneling $61 million in energy company money to politicians who supported failing nuclear power plants, but the point of the article is how companies are facing increasing concerns about “reputational risk,” which is the excuse offered by New York state financial regulators for trying to silence a controversial c4 in the NRA v. Vullo case pending in the U.S. Supreme Court.

Corporations increasingly face risk from their political spending, and that risk is heightened when they have not charted where funds will actually go. When political spending is funneled through “dark money” groups used by candidates and officeholders or through third-party groups such as trade organizations or non-profit partisan groups, corporations (and their shareholders) often don’t know how their money will actually be spent. When discovered and spotlighted, such contributions can ultimately associate a company with controversial political figures, positions contrary to core company values and interests, or corruption.

Internal Revenue Service

IRS Releases New Audit and Technical Guides, Including One of 501(c)(5) Organizations: We used to get annual Continuing Professional Education guides from the IRS Exempt Organizations Division, but those were discontinued 20 years ago (they still exist online and are still pretty useful). Now those have been replaced by Audit and Technical Guides in a variety of areas (note: ATGs become TGs “when completed”, meaning that the writing style shifts from “Do this, Not that” to include some background on historical, legal and tax principles, though not as much as in the older CPE texts), and four new Guides have been published:

• TG 3-10: Disqualifying and Non-Exempt Activities – Trade or Business Activities – IRC Section 501(c)(3)
• TG 5: Labor, Agricultural, and Horticultural Organizations – IRC Section 501(c)(5)
• TG 44: Qualified Tuition Program – IRC Section 529
• TG 65: Excise Taxes – Excess Benefit Transactions – IRC Section 4958

Historically, the amount of Service guidance on 501(c)(5) organizations, covering labor, agricultural and horticultural organizations, has been limited. Note, for example, that very few of the references in the new TG 5 are from the 21^st Century (except for the annual update of procedural Rev. Procs).  Having a new 40-page long guide on c5s is a welcome reminder, but not really a refresher or new perspective.  

FEC

Judge Resolves CLC Challenge to Heritage Action for America’s Campaign Finance “Deadlock Dismissal” Cases: After many years of litigation, we finally have at least one answer in the lawsuit Campaign Legal Center filed in 2018 against Heritage Action for America alleging a failure to disclose the names of donors to independent expenditures: the Federal Election Commission violated the law by failing to disclose a deadlocked vote on dismissal or enforcement. In a 22-page Memorandum Opinion, U.S. District Judge Carl J. Nichols of the District of Columbia, also granted Heritage Action’s Motion to Dismiss, rejected CLC’s Motion for Summary Judgment, and denied the FEC’s two Motions to Dismiss.

The cases arose because of the FEC’s unique statutory structure: no political party has a majority of members of the Commission. In practice, this requirement has little effect and the FEC goes about most of its business without a partisan deadlock. At least that was the tradition and reality for many years. In recent years, however, the FEC has “deadlocked” on a large number of decisions coming before it, which might have triggered a portion of the governing statute that provides that a denial of agency action might allow a private litigant to take the case to the District Court for D.C. Many of these cases stacked up over time recently, while the agency did not have a quorum of Commissioners to vote on action at all. Judge Nichols’ decisions have not cleared out all the remaining cases, but they do show that there is a clear path, subject to review on appeal by the D.C. Circuit, to eventually resolving these cases.

FEC Approves New Procedure to Notify Courts When It Has Voted Not to Defend An Action: As a result of “deadlock dismissal” cases during the period when the FEC was stalemated by ideological concerns, such as the Heritage Action for America cases discussed in the prior topic, Commissioner Allen Dickerson proposed a new procedure to notify courts and the U.S. Assistant Attorney for the Civil Right Division at DoJ that the Commission has voted not to defend the action. After receiving comments from CREW and IFS, the FEC adopted the proposal.

Department of Justice

DoJ Drops Prosecution of Sam Bankman-Fried For Alleged Campaign Finance Violations: After months of news about notices from the FBI and other investigators about how bankruptcy courts and others would force tax-exempt organizations to return contributions from Sam Bankman-Fried after the crypto billionaire was charged with numerous illegalities, the Department of Justice came up against an immovable force: the government of the Bahamas, which was refusing to extradite the fugitive if those charges were pending. The New York Times and Forbes have more. But still no authoritative guidance for tax-exempt organizations that want to know if they have to give back money and to whom.

Congress

Coalition Asks Congress to Pass the American Confidence In Elections Act: Luke Wachob of People United for Privacy Foundation sends along the news that “a coalition of over 70 nonprofit leaders and organizations [sent] a letter to Congress urging support for the American Confidence in Elections (ACE) Act’s protections for 501(c) donors, including provisions limiting the power of the IRS and SEC.”    

The American Confidence in Elections Act would enshrine four vital privacy protections into law through the following provisions:

• Speech Privacy Act of 2023. Codifies the Supreme Court decisions in NAACP v. Alabama and AFPF v. Bonta by prohibiting federal agencies from collecting or disclosing the names of nonprofit supporters. Agencies that are required by law to collect this information are exempted, and penalties for government officials that illegally reveal this sensitive information are included. (Sec. 308)
• Don’t Weaponize the IRS Act. Enshrines into law 2020 reforms issued by rulemaking that prevent the Internal Revenue Service from collecting and warehousing nonprofit donor information that the agency has acknowledged it does not use or need. (Sec. 309)
• IRS Protections. Prevents the IRS from writing new regulations to limit political speech by nonprofits. (Sec. 310)
• SEC Protections. Prohibits the Securities and Exchange Commission from requiring businesses to disclose their giving to nonprofits and membership in trade associations. (Sec. 341)

The letter and list of signers are available on the PUP website. A July 12 op-ed by Heather Lauer, CEO of PUFP, urging support for the legislation, ran in the Washington Times.

Courts

New Law Review Article on Percoco v. United States Argues That Consequences on Other Bribery Prosecutions Might Be Significant:  Law Professor Daniel Richman, of Columbia Law School, has a new article coming out in Yale L. J. Forum discussing how the Supreme Court’s recent decision in Percoco v. United States, 598 U.S. __ (May 11, 2023)  might affect future prosecutions for corruption. In Percoco, a close ally of then-New York Governor Andrew Cuomo was prosecuted for bribery for accepting a payment from a government contractor; the Department of Justice’s argument was that, although Percoco was not a government employee at the time he interacted with the contractor (he was on leave working for Cuomo’s political campaign), his influence over government employees and his imminent return to government employment was sufficient to trigger liability. The Supreme Court rejected the claim, noting that there were instances in which non-employees would be bound by their close ties and influence over government policy, but this wasn’t one of them.

Richman writes:

When a lobbyist makes a call to persuade a state official to do his bidding on behalf of a paying client, that’s called America. What about when a governor’s right-hand man, who has temporarily stepped down from his high executive post to work on the governor’s campaign and is about to resume his official duties, gets paid to make such a call (and gets quick results)? How hard should we try to distinguish between the two for the purposes of the federal mail and wire fraud statutes. We certainly don’t think of the lobbyist owing the duty of “honest services” to the public that the state official owes. Indeed, that’s why we may regret her influence. What about the once and future aide to the governor?

Such was the issue before the Justices this Term in Percoco v. United States, and they thought it quite easy, at least when it came to overturning the conviction of Joseph Percoco, a top aide to former New York Governor Andrew Cuomo – a conviction that the Court found had improperly rested on Percoco’s “special relationship” with the state government and the fact that he “dominated and controlled” state business. Justice Alito– usually quite sympathetic to the statutory arguments of federal prosecutors– wrote for a unanimous Court. While the case’s facts were unique and might, the Court suggested, have supported conviction on a different theory, the decision raises critical questions about the sweep of the Court’s recent reversals of convictions in public corruption cases and the effect of those decisions on corruption enforcement.

“Food, Not Bombs” Wins First Trial Holding that Feeding the Poor Outside A Public Library Is Expressive Speech: Remember Houston’s “Food, Not Bombs” controversy over whether the City violated the First Amendment (under Courts) by ticketing those who were feeding the homeless outside a public library? Houston Public Media reported that, on July 28, a jury found the City’s prohibition violated the First Amendment despite its claim that health and safety regulations allowed it to regulate how food was distributed to the public. Another 43 trials are already scheduled for those who have received tickets. Advocates are betting that a new Mayor will be elected next year and they will lobby the new administration to rescind the prohibition.

States

NY Attorney General’s Office Leaks Donor Information: New York was one of the States that required organizations to file their Schedule B lists of donors, pledging that it would hold them securely. Unfortunately, like California, whose disclosure of Schedule B lists led directly to its loss in the Supreme Court in Americans for Prosperity Foundation v. Bonta, somehow that donor list was leaked anyway. The notice said:

Due to clerical error, a small number of charitable organizations’ Schedule B to IRS Form 990 or IRS Form 990PF were inadvertently posted publicly on the Office of the Attorney General’s registry of charities for a limited period of time. The affected organizations are being contacted directly by the Charities Bureau. If you are not contacted, your organization has not been identified as being affected by this error. The Charities Bureau takes its obligations to protect the confidential information of the charities it regulates very seriously and has taken additional prudent steps to safeguard this information. If you have any concerns or questions, please contact the Charities Bureau by email to charities.bureau@ag.ny.gov.

It’s good to know that the Charities Bureau “takes its obligations to protect the confidential information of the charities it regulates very seriously.”

California Adopts New “Pay-to-Play” Regulations: Covington has an important new advisory about a big change to California law: “California recently passed a series of new regulations affecting its “pay-to-play” laws that limit political contributions by state and local government contractors and others involved in proceedings on contracts, licenses, permits, and other “entitlements for use” in the state.  These regulations implement changes to the law that took effect this year, which include applying the law to contributions to local elected officials and extending the prohibited period through 12 months after the end of a proceeding covered by the law.  The regulations also clarify some previously vague issues in the law.”

General

Leonard Leo Speaks Up: After being the punching bag for many in the media and elsewhere, Leonard Leo, accused of being the personification of malign influence on transparency and “good government,” has been relatively quiet in the media over what he’s doing and why. He emerged, briefly, but with some interesting perspectives, in, of all things, Maine Wire (h/t IFS), a podcast from way up north. Among other comments, Leo said:

[on anonymous giving:] “Well, first of all, I’ve always kind of chuckled at this idea that somehow I’m involved with dark money, because does anybody really doubt what it is that I’m helping to support? I think I’ve been pretty transparent about what I believe in, and pretty transparent about how I think the rule of law should be administered in our country. And so, I don’t think there’s a lot of opacity or darkness about what it is that I and the institutions I’m a part of help to support.

But look, you touched upon the history of our country. Our country has a rich history of anonymous giving, going all the way back to the Revolutionary War. But look, you touched upon the history of our country. Our country has a rich history of anonymous giving, going all the way back to the Revolutionary War. The Revolutionary War, the Civil War, the women’s suffrage moment, the Civil Rights movement of the 1950s and 1960s, the gay rights movement of the 70s and 80s, all of those movements were in important part — or in significant part, sometimes — supported by anonymous giving.

And the reason is because, the power of ideas, the power of the ideas ought to matter more than the peculiar personalities of the people who are supporting them. We should judge what we want to do in this country by the intellectual and moral force of an idea, not by the quirky personality, or looks, or wealth, or whatever of the people supporting it.

Look at the underlying idea — does it make sense? Is it morally justifiable? Is it intellectually supportable? And that’s why people give anonymously, so that people can focus their attention on the ideas.”

Tax-Exempt Organization and X Corp. (Twitter) Lawyers Rattle Sabers Over Organizations’ Claims About Hate Speech Tweets: So, influential tech media site PC Magazine reports that Elon Musk bought Twitter, created chaos and renamed the company “X,” all because he supported free speech? Who knew? Especially now that his lawyers have complained that a tax-exempt organization’s complaints about hate speech on Twitter (err, X) harm the company’s reputation, driving away advertisers. The organization’s lawyer complained that the complaint was “ridiculous” and demanded that X preserve all its records pending possible litigation. New York law at its finest, given that they could probably get everything they needed from federal agencies involved in suppressing social media hate speech (see above under Censorship). The Washington Post also weighs in.

GOVERNMENT CENSORSHIP OF ALLEGED “DISINFORMATION:”

Note: This special section covers some important recent highlights summarizing research and judicial findings on claims that federal officials coerced social media companies and others to censor legitimate free speech under the guise of combatting “disinformation.” Previously, coverage of this topic was scattered through several sections of Public Policy Advocacy Highlights.

Federal Judge’s Injunction Blocks Federal Officials From Encouraging Social Media Companies To Censor Protected Free Speech:  On July 4, U.S. District Judge Terry Doughty of the Western District of Louisiana issued an injunction against dozens of federal agencies and officials, blocking most contact with social media companies for the purpose of censoring social media information (with many exceptions). The sweeping order was explained by a memorandum opinion, 155 pages long, describing an enormous Executive Branch effort to censor protected speech by Americans on a variety of subjects, including, for example, posts making fun of First Lady Dr. Jill Biden. The Washington Post, New York Times, and many other media outlets have coverage.

The case is State of Missouri v. Joseph Biden, No. 3:22-cv-01213-TAD-KDM, July 4, 2023, W.D.La., brought by the States of Missouri and Lousiana and several individuals who allege they were harmed by concerted efforts of Federal officials to censor their social media postings because of their views. In many respects, Missouri v. Biden echoes the Petition for Certiorari presently waiting before the Supreme Court of the U.S. in NRA v. Vullo, No. 22-842, which recounts similar efforts by officials of the State of New York to silence an outspoken and controversial tax-exempt organization by convincing or coercing its banks and insurers to drop the organization as a client. In essence, both cases contend that the government officials, unable to block Americans’ speech directly, sought to do so indirectly through secret conversations and influence over necessary infrastructure providers. Both cases contend that viewpoint discrimination drives the government’s censorship decisions; the defendants, of course, deny that the First Amendment even applies to their actions. See, for example, New York’s Opposition to the Petition for Certiorari in Vullo, pp. 28-36.

Though the Missouri case is only in its preliminary stages, the factual record in the case is already enormous, which seems to have inhibited the immediate media coverage of the historic injunction. For example, the plaintiffs filed 350 pages of proposed findings of fact (Doc. 214-1), to which the defendants filed not only a Motion to Strike (Doc. 219), but also 723 pages responding to the proposed findings of fact. Mem. Op., at 8, n. 18. Tellingly, though the federal defendants contested the interpretation of the proposed findings of fact, “[a]t oral argument, the Defendants conceded that they did not dispute the validity or authenticity of the evidence presented.” Id.

Judge Doughty’s Memorandum Opinion spends close to 100 pages recounting specific instances of government officials contacting social media companies with public and private messages that accused the companies of not censoring material that did not violate the companies’ community standards or similar policies. For example, “[Facebook executive Nick] Clegg listed—in bold—demands that the White House had made in a recent meeting and provided a response to each. … Facebook noted that it was scrutinizing these accounts and censoring them whenever it could, but that most of the content did not violate Facebook’s policies. … Facebook even suggested that too much censorship might be counterproductive and drive vaccine hesitancy: ‘Among experts we have consulted, there is a general sense that deleting more expressions of vaccine hesitancy might be more counterproductive to the goal of vaccine uptake because it could prevent hesitant people from talking through their concerns and potentially reinforce the notion that there’s a ‘cover-up.’” Mem. Op., at 21-22. Four days later, “then-White House Press Secretary Jen Psaki (“Psaki”) … publicly reminded Facebook and other social-media platforms of the threat of ‘legal consequences’ if they do not censor misinformation more aggressively.” Id., at 22. Again, this case record tracks what happened in Vullo, complete with participation by top officials, secret meetings, and threats.

Ultimately, Judge Doughty’s analysis rested on standard First Amendment precedents, including the same cases making up the bulk of the material in the NRA v. Vullo Cert Petition pending before the Supreme Court:

Government action, aimed at the suppression of particular views on a subject that discriminates on the basis of viewpoint, is presumptively unconstitutional. The First Amendment guards against government action “targeted at specific subject matter,” a form of speech suppression known as “content-based discrimination.” National Rifle Association of America v. Cuomo, 350 F. Supp. 3d 94, 112 (N.D. N.Y. 2018) (which is now sub nom. Vullo). The private party, social-media platforms are not defendants in the instant suit, so the issue here is not whether the social-media platforms are government actors, but whether the government can be held responsible for the private platforms’ decisions.

Mem. Op., at 88.

If there is a bedrock principal underlying the First Amendment, it is that the government may not prohibit the expression of an idea simply because society finds the idea itself offensive or disagreeable. Matal v. Tam, 137 S. Ct. 1744, 1763 (2017); see also R.A.V. v. City of St. Paul, 505 U.S. 377 (1996). The benefit of any doubt must go to protecting rather than stifling speech. Citizens United v. Federal Election Commission, 130 S. Ct. 876, 891 (2010). … The Court, after examining the facts, has determined that some of the Defendants either exercised coercive power or provided significant encouragement, which resulted in the possible suppression of Plaintiffs’ speech.

Mem. Op., at 89.

Mem. Op.,. at 93-94.

Through meetings, emails, and in-person contacts, the FBI intrinsically involved itself in requesting social-media companies to take action regarding content the FBI considered to be misinformation. The FBI additionally likely misled social-media companies into believing the Hunter Biden laptop story was Russian disinformation, which resulted in suppression of the story a few weeks prior to the 2020 Presidential election. Thus, Plaintiffs are likely to succeed in their claims that the FBI exercised “significant encouragement” over social-media platforms such that the choices of the companies must be deemed to be that of the Government.

Mem. Op., at 108.

Similarly, the Memo Opinion explores the role of the Cybersecurity and Infrastructure Agency, the same subject as the House Judiciary Committee staff report released on June 26 (see next topic below). As the House Judiciary Committee found, CISA established a tax-exempt organization to, in CISA’s own words, “get around unclear legal authorities, including very real First Amendment questions that would arise if CISA or the other government agencies were to monitor and flag information for censorship on social media.” Memo. Op., at 111. And then CISA tried to cover up its subterfuge:

At oral arguments on May 26, 2023, Defendants argued that the EIP operated independently of any government agency. The evidence shows otherwise: the EIP was started when CISA interns came up with the idea; CISA connected the EIP with the CIS, which is a CISA-funded non-profit that channeled reports of misinformation from state and local government officials to social-media companies; CISA had meetings with Stanford Internet Observatory officials (a part of the EIP), and both agreed to “work together”; the EIP gave briefings to CISA; and the CIS (which CISA funds) oversaw the Multi-State Information Sharing and Analysis Center (“MS-ISAC”) and the Election Infrastructure Information Sharing and Analysis Center (“EI-ISAC”), both of which are organizations of state and local governments that report alleged election misinformation.

Mem. Op., at 111-12.

The Missouri injunction memorandum opinion is based on preliminary motions and stipulated facts. Nevertheless, Judge Doughty did not mince words: “government agencies have chosen to associate, collaborate, and partner with these organizations, whose goals are to suppress protected free speech of American citizens. The State Department Defendants and CISA Defendants both partnered with [tax-exempt] organizations whose goals were to ‘get around’ First Amendment issues.” Mem. Op., at 114.

Judge Doughty concludes:

The Plaintiffs are likely to succeed on the merits in establishing that the Government has used its power to silence the opposition. … the evidence produced thus far depicts an almost dystopian scenario. During the COVID-19 pandemic, a period perhaps best characterized by widespread doubt and uncertainty, the United States Government seems to have assumed a role similar to an Orwellian “Ministry of Truth.” 

The Plaintiffs have presented substantial evidence in support of their claims that they were the victims of a far-reaching and widespread censorship campaign. This court finds that they are likely to succeed on the merits of their First Amendment free speech claim against the Defendants.

Mem. Op., at 154.

House Judiciary Committee Staff Report: CISA Outsourced Government Censorship to a Nonprofit Following Lawsuit: One of the first fruits of the new Republican-led House Judiciary Committee’s investigation of “weaponization” is a June 26, 2023, interim Committee Staff Report of the Committee and the Select Subcommittee on the Weaponization of the Federal Government titled: “The Weaponization Of CISA:  How A ‘Cybersecurity’ Agency Colluded With Big Tech And ‘Disinformation’ Partners To Censor Americans.” The report describes how the Cybersecurity and Infrastructure Security Agency, established in 2018 within the Department of Homeland Security, “metastasized into the nerve center of the federal government’s domestic surveillance and censorship operations on social media.” The report has three major parts:

From the Executive Summary:

By 2020, CISA routinely reported social media posts that allegedly spread “disinformation” to social media platforms.  By 2021, CISA had a formal “Mis-, Dis-, and Malinformation” (MDM) team. In 2022 and 2023, in response to growing public and private criticism of CISA’s unconstitutional behavior, CISA attempted to camouflage its activities, duplicitously claiming it serves a purely “informational” role.

This interim staff report details, among other things, that:

• CISA is “working with federal partners to mature a whole-of-government approach” to curbing alleged misinformation and disinformation. 
• CISA considered the creation of an anti-misinformation “rapid response team” capable of physically deploying across the United States. 
• CISA moved its censorship operation to a CISA-funded non-profit [the Center for Internet Security, with subsidiaries] after CISA and the Biden Administration were sued in federal court, implicitly admitting that its censorship activities are unconstitutional.  
• CISA wanted to use the same CISA-funded non-profit as its mouthpiece to “avoid the appearance of government propaganda.”
• Members of CISA’s advisory committee agonized that it was “only a matter of time before someone realizes we exist and starts asking about our work.”

The June report is only a preliminary step, the Judiciary Committee notes, because CISA has not been responsive to subpoenas and information requests. In addition, other agencies, including the FBI, are also involved in the alleged “weaponization” scheme, and will likely come under similar scrutiny.

New York State Files Its Opposition to Certiorari in NRA v. Vullo, Claiming that Qualified Immunity Protects It Against the First Amendment: NRA v. Vullo, No. 22-842, began as a fight between two tax-exempt organizations over guns; five years later, at the Supreme Court, both sides are representing by heavyweight “gunslinger” constitutional law professors, ready for the fight at the OK Corral. But despite having hired the best in the country in their respective fields, the pugilists are talking past each other rather than really engaging. In other words, there are two issues in this case: violations of the First Amendment and “qualified immunity,” which immunizes federal law enforcement personnel from liability for violating constitutional rights when there was no clear prior judicial precedent applying those constitutional protections.

The counsel of record for the NRA is Eugene Volokh, a nationally-recognized First Amendment expert at UCLA Law School, who is routinely cited by the Supreme Court in its opinions. His main argument in the Petition for Certiorari is, predictably, that New York can’t violate the First Amendment directly so it shouldn’t be able to violate it indirectly by threatening someone else. “This case arises from a series of actions—including press releases, official regulatory guidance, and contemporaneous investigations and penalties—issued by or on behalf of New York’s powerful Department of Financial Services (“DFS”) against financial institutions doing business with the NRA. Among other things, the Complaint states that Superintendent Maria Vullo: (1) warned regulated institutions that doing business with Second Amendment advocacy groups posed “reputational risk” of concern to DFS; (2) secretly offered leniency to insurers for unrelated infractions if they dropped the NRA; and (3) extracted highly-publicized and over-reaching consent orders, and multi-million dollar penalties, from firms that formerly served the NRA.” Pet., at 3.

On the other side is Trevor Morrison, a professor from NYU Law School, whose specialty is criminal law, whose main argument in his Opposition to the Petition, filed on June 23, is that “qualified immunity” protects New York officials from even being tried for constitutional violations. “Petitioner has not identified a single case clearly establishing that anything like Respondent’s alleged actions crossed the line between permissible persuasion and unconstitutional coercion. To the contrary, as the Second Circuit recognized, “[t]he Complaint’s factual allegations show that, far from acting irresponsibly, [Respondent] was doing her job in good faith.” Opposition, at 10.

It Takes 297 Pages For DoJ to Explain Why Censoring Americans’ Social Media Through Private Companies Is Really OK: As Columbia Law Professor and noted litigator Phillip Hamburger explains in a Wall Street Journal op-ed (paywall) discussing State of Missouri v. Joseph Biden, No. 3:22-cv-01213-TAD-KDM, July 4, 2023, W.D.La., “The Supreme Court has adopted doctrines that make it hard for officials to see that they’re acting unconstitutionally.” Indeed, it’s not just “officials” who have trouble; the same may be said for the lawyers at the Department of Justice, who took 297 pages to explain why it’s really ok for the federal government to “jawbone” social media companies to censor private speech. Most of the DoJ opposition to the Missouri Complaint is a recitation of the many “disinformation” schemes used in recent years and a standard DoJ litany of denials of standing, justiciability and other procedural roadblocks that one can expect with any initial DoJ filing. Having it all in one place, however, gives some perspective on the massive scale of the federal government’s recent efforts and the disorganization of the legal theories and plans for execution.

Like the DoJ response, Hamburger’s article is complicated, but he does summarize his thesis succinctly:

The Supreme Court has adopted doctrines that inadvertently erode the ability of officials to see that censorship is unconstitutional. Although the doctrines, when carefully considered by sophisticated judges, reveal the unlawfulness of the suppression, they have weakened the constitutional obstacles to censorship by depriving them of their demotic clarity. They even seem to invite game-playing by officials. So FBI agents and other officials imagine that censorship is permissible. And in defending the errant officials, the Justice Department echoes their manipulative reading of weak doctrine. …

No wonder we have censorship. It has no real justification in the Constitution or even judicial doctrine. But judicial doctrine makes censorship plausible by leaving room for officials to think they can get away with crude and facile evasions. That’s why no one in government seems very worried about violating the Constitution. They think the court has given them a free hand to suppress speech.

There is significant merit in Hamburger’s argument, highlighted in the strained logic of the DoJ filing in Missouri, which reaches at every opportunity to say why the express terms of the First Amendment (“Congress shall make no law …”) don’t actually apply. For example, as in the Petition for certiorari in NRA v. Vullo points out, the U.S. Court of Appeals for the Second Circuit said that a government regulator can act “in good faith” when she reacts to social media postings by threatening private businesses who support tax-exempt organizations whose politics disagree with the regulator’s. Why? Because the regulator is supposedly just using “government speech,” which the Second Circuit says is not limited by the First Amendment. But that is a gross over-simplification by the Second Circuit, since the basic test in such cases is whether the regulator’s speech is intended to convince (permitted) or to coerce (prohibited) the private business’ speech. Both Hamburger’s op-ed and the DoJ brief in Missouri deal with this issue, but are like two trains passing in the night.

Hamburger: “In the course of defending government speech from claims of viewpoint discrimination, the court has suggested that government enjoys speech rights. Seizing on this, the Justice Department defends officials seeking censorship on the theory that when they request suppression, they are merely engaging in protected government speech., But the First Amendment is a limit on government. It doesn’t give government a freedom of speech to abridge the freedom of speech of others.”

DoJ: “Finding that Dr. Fauci’s publicly (or privately) expressed views render him “responsible for,” … the decision of a social media company and thus violates the First Amendment would, ironically, transform the First Amendment into a tool for muzzling routine government speech.” Memo, at 234. “Plaintiffs have no First Amendment right that entitles them to muzzle such plainly legitimate Government speech.” Id., at 270.

In other words, both sides are saying the other should not be using the First Amendment the way the other proposes. But all that ignores caselaw from the last sixty years, which does not define government speech as an absolute, but as a spectrum, on which government’s ability to control speech depends on the speech’s proximity to core government functions. As Justice O’Connor wrote for the Court in Board of County Commissioners, Wabaunsee County v. Umbehr, 518 U.S. 668 (1998):

Our unconstitutional conditions precedents span a spectrum from government employees, whose close relationship with the government requires a balancing of important free speech and government interests, to claimants for tax exemptions, users of public facilities, and recipients of small government subsidies, who are much less dependent on the government but more like ordinary citizens whose viewpoints on matters of public concern the government has no legitimate interest in repressing. … The First Amendment permits neither the firing of janitors nor the discriminatory pricing of state lottery tickets based on the government’s disagreement with certain political expression.

Id., at 680 (cleaned up). 

  Perhaps the Supreme Court will grant cert in Vullo and clarify at least this one area.

IRS

Supreme Court Grants Certiorari in Moore v. United States, Setting Up Significant Fight Over “Wealth Taxes:” The Supreme Court’s decision June 26, 2023, decision to grant certiorari to review the Ninth Circuit’s decision in Moore v. United States, No. 22-800, is a far bigger deal than is apparent in the limited media coverage accorded the Court’s action. The underlying question in Moore is whether the Sixteenth Amendment’s authorization of a federal “income” tax includes only “realized” income, or also includes “unrealized” wealth, such as increased value of stock holdings over time. This is a current hot topic of debate, as Congress considers “wealth taxes.”

In 2006, Charles and Kathleen Moore invested $40,000 in a friend’s new company in India that would provide affordable farming equipment to farmers in India’s most impoverished regions. The company was a success, expanding rapidly across India through reinvesting all its earnings. The Moores never received any dividends or other payments from their investment. Then, in 2018, they learned that the Tax Cuts and Jobs Act of 2017 had enacted a Mandatory Repatriation Tax, 26 U.S.C. § 965, which deemed a percentage of the company’s earnings to be current “income” to the Moore’s, even though they had not received a penny. The tax was imposed solely on the ownership of shares of a foreign company’s stock, not on the income realized from that ownership, which scholars noted raised a constitutional question. Sean P. McElroy, The Mandatory Repatriation Tax Is Unconstitutional, 36 Yale J. Reg. Bull. 69, 82 (2019). The Moore’s were assessed an additional $14,729 in tax.

In Moore v. United States, 36 F.4^th 930 (9^th Cir. 2022), the Ninth Circuit held that the Sixteenth Amendment did not require realization of income to authorize a tax. “Once the federal government decides to tax something, then, subject to any constitutional limitations, its power to tax and flexibility as to how to accomplish that must necessarily be broad. See, e.g., Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 570 U.S. 205, 213 (2013) (stating that the Spending Clause “provides Congress broad discretion to tax”).” This is a curiously-incomplete citation to AOSI I, which is well-known for its holding that Congress’s ability to impose conditions on tax-exempt organizations is limited. All. for Open Soc’y Int’l, Inc., 570 U.S. at  2014–15 (“[T]he relevant distinction that has emerged from our cases is between conditions that define the limits of the government spending program—those that specify the activities Congress wants to subsidize—and conditions that seek to leverage funding to regulate speech outside the contours of the program itself”); Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 140 S. Ct. 2082, 2086 (2020) (“AOSI II”) (same). The Ninth Circuit, however, forged onwards:

It is also clear that Congress has sought to exercise the full scope of its constitutionally provided power to tax. See Comm’r v. Glenshaw Glass Co., 348 U.S. 426, 429 (1955) (noting that the definition of “gross income” to be reported by taxpayers “was used by Congress to exert in this field ‘the full measure of its taxing power.’”). Given Congress’s expansive intent in taxing gross income, exclusions from gross income are construed narrowly in favor of taxation.” Comm’r v. Dunkin, 500 F.3d 1065, 1069 (9th Cir. 2007). …

Whether the taxpayer has realized income does not determine whether a tax is constitutional. In Heiner v. Mellon, the Supreme Court stated that whether or not a “partner’s proportionate share of the net income of the partnership” was distributable was not material to whether it could be taxed. 304 U.S. 271, 281, (1938) …  Helvering v. Enright’s Est., 312 U.S. 636, 641 (1941) ). And, the Supreme Court has made clear that realization of income is not a constitutional requirement. See Helvering v. Horst , 311 U.S. 112, 116 (1940) (“[T]he rule that income is not taxable until realized …. [is] founded on administrative convenience … and [is] not one of exemption from taxation where the enjoyment is consummated by some event other than the taxpayer’s personal receipt of money or property.”); see also Helvering v. Griffiths , 318 U.S. 371, 393–94 (1943) (explaining that Horst “undermined … the original theoretical bases” of a constitutional realization requirement).

36 F.4th at 934-36 (cleaned up).

Four Ninth Circuit judges dissented from rehearing the decision en banc, 53 F.4^th 507 (9th Cir. 2022), led by Judge Patrick Bumatay and including influential Judge Sandra Ikuta, noting that

[T]oday, Congress may enact a direct tax on “incomes”—and only on “incomes”—without apportioning the tax. The Sixteenth Amendment thus struck a delicate balance for federal taxing power—freeing Congress from the unwieldy requirement of apportionment, but only for taxes on “incomes.” Nothing in the Sixteenth Amendment relieved Congress of its duty to apportion other forms of direct taxation, such as a tax on property interests. Now, more than a century after its ratification, our court upsets the balance reached by the people. We become the first court in the country to state that an “income tax” doesn’t require that a “taxpayer has realized income” under the Sixteenth Amendment. Moore v. United States, 36 F.4th 930, 935 (9th Cir. 2022).

36 F.4th at 934-36 (cleaned up).

53 F.4^th at 508. In other words, the dissenters noted that the MRT under IRC § 965 not only is not authorized by the Sixteenth Amendment, but that it violates the “delicate balance” struck by the amendment process.

In the face of this recital of precedent and sweeping governmental tax authority, the Moores told the Supreme Court in their Cert Petition that “While precedent has approved income taxes on constructively realized income, no decision until the Ninth Circuit’s in this case dispensed with the need for realization altogether. In so doing, the decision below sweeps away the essential restraint on Congress’s taxing power, opening the door to unapportioned taxes on property (as in this case) and anything else Congress might deem to be ‘income.’ This case accordingly presents a constitutional question of the first order, one that warrants the Court’s review.” Eight amicus briefs were filed in support of the Petition, all by conservative-leaning organizations.

The Federal government’s response to the Petition also cited a type of delicate balance struck in IRC § 965, but a different balance from the Petitioners’. Instead, Solicitor General Elizabeth Prelogar noted that Congress had balanced changes relaxing taxes levied on repatriated funds against the new taxes on unrepatriated changes in wealth. She argued that this new tax helped avoid a potential windfall for overseas corporations that deferred income.   

The most direct impact on tax-exempt organizations will likely be on fundraising, but the biggest impact could be on foundations’ endowments. In a Policy Brief, the Philanthropy Roundtable predicted that taxing unrealized wealth would discourage “Philanthropists … from making charitable donations if they are subject to taxes on unrealized gains, which could have a long-term effect on charitable giving. What’s more, if such taxes are deemed constitutional, this could open the door to additional federal taxes on property, wealth, and possibly even the assets of charitable foundations.” Lane Powell attorneys recommend that “Taxpayers impacted by these other regimes also should consider whether they should file protective claims.”

Jacobin magazine, on the other hand, described the case as

The real goal of the case is “to slam shut the door on a federal wealth tax,” as the couple’s lawyers wrote in a 2021 column. The couple’s petition to the Supreme Court expressly decries previous wealth tax proposals from Democrats, including Biden, and urges the justices to “head off a major constitutional clash down the line.” A host of powerful interests, including the nation’s top business lobby, pressed the Supreme Court to take up Moore. So did a conservative think tank with financial ties to two of the central names in the Supreme Court’s recent ethics scandals: Elliott Management hedge fund chief Paul Singer and Texas real estate magnate Harlan Crow. Both billionaires could benefit if Supreme Court justices were to preemptively declare that taxes on wealth are unconstitutional.

IRS Rejects 501(c)(3) Status for “Name, Image, Likeness Collectives” Because They Provide Private Benefit to College Athletes: College sports is big business, built on the efforts of young amateur athletes. In part to encourage top athletes to attend their schools, Sports Illustrated reports that some universities who compete in the highest levels of college football have created an ecosystem of “collectives” to pay athletes for their names, images and likenesses (which include signatures and the like). In July 2021, the NCAA said these payments would not affect the athletes’ eligibility to compete. Congress quietly seems to agree. Taking the Buzzer Beater to the Bank: Protecting College Athletes’ NIL Dealmaking Rights: Hearing Before the Subcomm. on Innovation, Data, & Commerce of the H. Comm. on Energy and Commerce, 118th Cong. (2023) (hearing memorandum) (“NIL Collectives are a third-party collection of fans and boosters who pool together capital to compensate athletes who play for a given school. Over 250 collectives have been formed nationwide and nearly one-third of collectives have a nonprofit status.”).  Time provides more background on NILs in smaller sports, including one high jumper at the University of Texas who rakes in $1 million a year.

For some unknown reason, the Internal Revenue Service has granted 501(c)(3) charitable status to dozens of these “collectives”, which have received “millions in donations from boosters who are under the impression that their gifts fall under tax deduction.” Sounds a bit like private benefit to the athletes, right? Congress apparently did not see fit to statutorily exempt these collectives from the private benefit rules. So, the question would be whether the private benefit is incidental to charitable activities under both the organizational and operational tests for charitable status. But there wasn’t any good IRS guidance on what was acceptable incidental benefit and what was not.

Finally, on May 28, the IRS Chief Counsel’s Office stepped in and said no mas to many of the collectives. Oh, and Sports Illustrated also reports thatthe President of the NCAA, which started this process in 2021, agrees with the Service’s position. It’s a good memo, setting out for all those newly-hired and semi-trained Revenue Agents and reviewers the basics, background and caselaw for judging private benefit. But how many? “Most?” Maybe not. It’s hard to tell.

In a 12-page memo, Chief Counsel’s Analysis section begins: “we believe that the benefit to private interests will, in most cases, be more than incidental both qualitatively and quantitatively. Student-athletes generally benefit from a nonprofit NIL collective through the compensation paid by the collective for use of their NIL. This private benefit is not a byproduct but is rather a fundamental part of a nonprofit NIL collective’s activities.” P. 8 (emphasis added).

The standard for all collectives is the good ‘ol “facts and circumstances” test, because that’s the Service’s default. Interestingly, particularly in light of its “in most cases” statement on P. 8, Page 12 of the memo (also in the Analysis section) sets an 80%-100% per se test for substantiality outside of “facts and circumstances,” P. 12, which is a fairly high bar. And a footnote on the same page gives a safe harbor for those collectives that have already been granted charitable status: “We note that in reconsidering the exempt status of collectives that have already applied for and received favorable determination letters, it may be appropriate to grant relief under section 7805(b).”

Sounds like the future looks busy for many tax-exempt specialists who work with big schools with big teams. But also for some (probably a small number) of the smalls as well.

Iowaska Church of Healing Appeals Denial of 501(c)(3) Application: As discussed in the April Public Policy Advocacy Highlights, the Iowaska Church of Healing wanted IRS approval as a religious charity, but admitted using ayahuasca, a tea brewed from South American plants that contain a chemical deemed illegal under U.S. drug laws, as part of its religious rites. Even the sweeping Religious Freedom Restoration Act doesn’t override the IRS’s ability to deny charitable status under the illegality and public policy doctrines. The Service denied the church’s Form 1023 Application for Exemption on the grounds that the church was not organized and operated exclusively for exempt purposes because Ayahuasca is illegal under federal law and violates public policy. The church then sued the IRS claiming that this violated the church’s rights under RFRA, but U.S. District Judge Beryll Howell rejected the church’s claim. The court issued a summary judgment in favor of the IRS, agreeing with the IRS that the church doesn’t qualify under section 501(c)(3) unless it gets a permit exempting its Ayahuasca use, because of the illegality doctrine. The court also found that plaintiff lacked standing under the Religious Freedom Restoration Act because IRS exemption would not allow the church to use Ayahuasca legally. (Ironically, the church did not have to file Form 1023 to obtain tax-exemption.) Now, according to Des Moines TV station KCCI, the church has now filed an appeal of Judge Howell’s decision.

Deep Dive on No Labels Offers Analysis of Donors Based on IRS Filings: How often do you see an IRS Form 8872 “Political Organization Report of Contributions and Expenditures” printed in a national opinion publication? Much less, one which demonstrates the opposite of what it’s claiming to show? The routine complaint about “dark money” is that it hides the donors to an allegedly nefarious organization. As Mother Jones put it recently, “No Labels, the political outfit preparing to run a “unity” ticket in 2024 that Democratic strategists and Never-Trump Republican operatives fear will siphon votes from President Joe Biden, is what’s known as a dark-money group. Unlike political parties, political action committees, and House, Senate, and presidential candidates, it is not required to reveal who is funding it.” But if you read far into the article, you’ll find that at least some of the information is available from IRS and other federal government filings: “As a nonprofit, No Labels must file tax returns that are public. … IPFA, according to reports it filed with the IRS, …  A report it submitted last month to the IRS detailed the donations and the expenditures. … [the 8872 is reprinted at this point] …  it continued to file reports to the IRS …”

The Mother Jones article does complain that it really doesn’t know much more than is publicly disclosed, and speculates: “The lion’s share of the money that has moved in and out of IPFA has not been disclosed in its filings with the IRS, and there is no telling whether the listed donors are representative of the organization’s overall sources of financing. Most of the funding for No Labels’ 2024 project remains secret, as this group that claims to be addressing popular disenchantment continues to use the same-old tactics of big-money politics and keeps the voters in the dark.”

In other words, the information, or at least some of it, is reasonably available if someone is willing to do the classic kind of spadework that journalists, legal researchers and opposition researchers routinely do. What the breathless article demonstrates is that the target organization, No Labels, does, in fact, have bipartisan and fairly well-known donor support. And it appears that none of these revealing disclosures rely on illegal leaks of protected taxpayer information by, inter alia, organizations that are subject to losing their tax-exemptions by participating in illegality or activities against declared public policy (such as leaking protected taxpayer information).

FEC

FEC Deadlocks Over Request to Regulate “Deep Fakes” in Campaign Ads: The era of “deep fake” campaign ads began long ago, but new technology vastly expands the possibilities of mischief. Now Public Citizen has asked the Federal Election Commission to step in (h/t IFS) to regulate the “fraud” such ads might comprise. “Public Citizen requests that the Federal Election Commission clarify when and how 52 U.S.C. § 30124 (“Fraudulent misrepresentation of campaign authority”) applies to deliberately deceptive AI campaign ads.” After debating opening a rulemaking on the Public Citizen Petition, the FEC voted 3-3 not to open rulemaking.  As Roll Call reported, Commissioner Allen Dickerson pointed out that the agency’s jurisdiction is limited; Chair Dara Lindenbaum agreed, but voted in favor of opening a rulemaking to hear “some really wonderful comments in from people who may not usually comment … that may have ideas that may help us or Congress.”

“[T]he District Court Might Have Ruled Without A Full Appreciation For The Agency’s Tortuous Experience” – Former FEC Chair Lee Goodman Files Solo Amicus Brief in Defaulted CLC Lawsuit Over FEC Stalemated Action: The potential disruption to the Federal Election Commission from bypassing stalemated FEC action was on full view to the D.C. Circuit in an amicus brief filed by former FEC Chair and Commissioner (and, while in private practice, participant in the First Tuesday Lunch Group) Lee Goodman:

When the District Court ruled against the Commission and remanded the matter to the “expert agency” to distinguish between exempt versus non-exempt “input costs” incurred by citizens to produce and disseminate online political content, See Campaign Legal Center v. Federal Election Commission, Civ. A. 192336 (D.D.C. Memorandum Opinion dated December 8, 2022) (“Mem. Op.”), amicus became concerned that certain language in the opinion could be construed to disrupt nearly two decades of carefully calibrated regulations implementing a complex statute while ensuring free political speech on the internet. The arbitrary and capricious standard of review applicable to the Commission’s decision as well as the deference courts are to afford an agency’s interpretation of its own regulations are safeguards against such errors, but they did not restrain the lower court here.

Amicus also was concerned that the District Court might have ruled without a full appreciation for the agency’s tortuous experience with trying to regulate political speech on the internet, the history underlying the Internet Exemption, and the reasons for exempting free online posts and the “input costs” incurred to produce them from the restrictions the Federal Election Campaign Act applies to paid “advertising.” The District Court was denied the benefit of a complete briefing on the historical rationale of the exemption, including “input costs,” because the Commission had defaulted. Because the District Court was not fully informed, imprecise language in its ruling effectively reversed a regulation firmly grounded in the text of the Act as well as years of rulemaking history, practical experience in regulating online political speech, and sound legal and policy foundations. … This Court must properly apply the arbitrary and capricious standard of review to preserve the integrity of the Commission’s carefully calibrated regulation of political speech disseminated for free on the internet and to prevent the speech chilling turmoil the District Court’s opinion would cause.

DoJ

Senate Passes Two Bills to Amend FARA: The U.S. Senate has now passed two bills to amend the creaky Foreign Agent Registration Act. S. 264, the Lobbying Disclosure Improvement Act, passed by unanimous consent, identifies  registered lobbyists who rely on disclosure under the Lobbying Disclosure Act for exemption from FARA registration. S. 829, the Disclosing Foreign Influence in Lobbying Act, is potentially far more reaching, requiring the disclosure of “the name and address of each government of a foreign country (including any agency or subdivision of a government of a foreign country, such as a regional or municipal unit of government) and foreign political party, other than the client, that participates in the direction, planning, supervision, or control of any lobbying activities of the registrant.”  The Committee Report explains the purpose of the legislation:

there are instances in which, due to political climate, government structure, or other factors, some foreign governments and political parties are able to exert significant control over lobbying organizations without having a direct financial stake in lobbying activities. According to a January 2021 report from the Center for Strategic and International Studies, since 2012, the Chinese Communist Party (CCP) in particular is promoting a new form of corporate governance that calls for inserting provisions directly into corporate charters that give the company’s internal CCP organization a voice in management decisions. Reports by law enforcement organizations to Congress establish that the CCP is able to use its role in private companies to advocate for CCP interests and that other foreign governments or political parties would be able to engage similarly. The ‘‘Disclosing Foreign Influence in Lobbying Act’’ closes the LDA loophole that allows such foreign governments and political parties to escape disclosure by requiring disclosure of any participation by a foreign government or political party in the direction, planning, supervision, or control of lobbying activities, regardless of financial contribution, ownership of the client, or other financial incentive.

S. 829 is the latest version of legislation that passed three Senate Committees in 2019, and is the first one to have passed the Senate. Last month’s Public Policy Advocacy Highlights noted the bipartisan support for the bill with the odd-bedfellows coalition of chief Senate sponsor Republican Chuck Grassley and Democrat Sheldon Whitehouse, but now the bill has passed the Senate on unanimous consent.

Covington has an explainer that delves into some unanswered questions raised by the new legislation. For example: “This change, if enacted, would present new challenges for the regulated community. The amendment assumes that it is always clear when a filer has a FARA registration obligation and is relying on the LDA exemption, but that is not always the case. This amendment would force LDA registrants to take a position on whether or not they believe they are engaged in FARA registrable activities.”

“Fore!” Does Providing PR Services to Saudi-backed LIV Golf Require Registration Under FARA? (H/t Craig Engle). The Foreign Agent Registration Act regulations provide that, if a foreign government (or foreign political party) is the “principal beneficiary” of the work, the exemption from FARA registration for registered lobbyists is not applicable, even if you are representing a non-governmental entity. See 28 CFR § 5.307. Politico reports that presidential candidate “Vivek Ramaswamy” has “fired” the Gitcho Goodwin public relations team because the firm also represented the LIV Golf League, which is funded by the Saudi Arabian government. “It’s not uncommon for foreign entities to seek out politically-connected consultants to help navigate U.S. regulations and politics. Their registration on behalf of LIV marked a stark overlap of foreign lobbying and a presidential campaign in which the state of U.S.-Saudi relations is likely to be a topic of debate.” A federal magistrate ruled in February that the Saudi Public Investment Fund “is not a mere investor in LIV; it is the moving force behind the founding, funding, oversight and operation of LIV.”

CONGRESS

“Lady Justice may be blind, but before you speak to her, Rhode Island Senator Sheldon Whitehouse wants to see your donor list.” Luke Wachob from People United for Privacy has a scoop on Sen. Whitehouse’s latest attempt to sneak in more donor disclosure from tax-exempt organizations doing perfectly legal things. This time, Whitehouse has included a section in his “Supreme Court Ethics, Recusal and Transparency Act,” S. 359, which would require any tax-exempt organization that files one amicus brief a year to include in the brief disclosure of its “significant donors.”

COURTS

Despite Headlines, Supreme Court Statistics Show A Tale of Three Junes, Only One of Which Was “Red:” The dust hasn’t really settled on the just-completed Supreme Court Term, but some media commentary suggests that it was all “red” since 2020. Law Prof. Josh Blackman has a rundown in Volokh Conspiracy (an influential libertarian law professors’ blog in Reason magazine) about why that view isn’t accurate.

Flash back to June 2020. The supposedly-conservative 5-4 majority of the Supreme Court, in case after case, swung to the left: McGirt, Mazars, Vance, June Medical, Regents, Bostock, and so on. Things became so bleak I referred to the period as Blue June.

Now, jump forward to June 2022. The expanded 6-3 conservative majority, in case after case, swung to the right: West Virginia, Castro-Huerta, Kennedy, Dobbs, Bruen, Carson, and so on. In my lifetime, I could not recall such a consistent string of decisions that favored conservative jurisprudence. I called the period, fittingly, Red June.

What do I make of June 2023? Well, it is somewhere in between Red June and Blue June. Call it Purple June. There were several significant decisions to the right: 303 Creative, Nebraska, and Students for Fair Admission. (Curiously, all the hard-right decisions came on the last two days of the term–more on timing later.) There were several significant decisions to the left: Moore, Texas, Brackeen, and Milligan. And there were a few significant decisions that are harder to haracterize: Groff, Mallory, and Pork Producers. It’s a mix.

Meanwhile, the Washington Examiner interviewed Adam Feldman, who runs the numbers-crunching blog Empirical SCotUS, about ideological splits on the Court, who seems to echo Prof. Blackman: “Feldman said several factors explain the shift, noting that a large bulk of the 59 cases to be decided this term have seen ‘some mix of liberal justices in the majority. … “Whether they truly agree with it or not — with the majority opinions — I think they’re there to possibly make it less of a hard conservative outcome.”

Civil Procedure Junkies Alert: Yet Another District Court Analyzes Rule 12 Motions to Dismiss Robocall Complaints Under TCPA: Many tax-exempt organizations, including political committees, often use automatic dialing equipment of some type (“robodialers”). Robodialers are lawful, but are regulated under the various iterations of the Telephone Consumer Protection Act, 47 U.S.C. § 227, as well as many different state laws of varying complexity. Barr v. Amer. Ass’n of Political Consultants, 591 U.S. __, 140 S.Ct. 2335 (2020) (under strict scrutiny review and after questions at oral argument about whether every cellular phone with autodialing capability would violate Section 227, the Court found 6-3 that the Section violates, in part, the First Amendment). Many federal courts have reviewed the TCPA and its applications under a variety of fact patterns.

The latest of those robodialer cases is Shoemaker v. Zeitlin, No. 1:21-CV-1668-Conner, M.D.Pa, June 5, 2023, (h/t Craig Engle) in which Judge Christopher Conner rejected, in part, a motion to dismiss under the TCPA, and then granted a motion to dismiss a Pennsylvania unjust enrichment claim because the plaintiffs failed to provide any substantive legal or factual rationale for the application of state law. “We deem plaintiffs’ failure to respond to this dispositive legal argument an abandonment of their claims.” Slip op., at 25. Ouch. The decision has two important functions: it summarizes the tortured current state of TCPA civil procedure claims in the wake of AAPC, and it shows that courts, faced with many such cases, will not be lenient against counsel who are remiss in pleading under both federal and state robodialer claims. You’ve been warned (or if you’re defending, you now have more in your quiver).

Speaking of Robocalls, New FCC Limits and Requirements Go Into Effect in July: New Federal Communications Commission rules go into effect on July 20. There are a LOT of big changes for tax-exempt organizations and others, including limits on the number of calls that can be made each month, required training, and automated opt-outs. Holtzman Vogel has an explainer.

Chalk Up A First Amendment Win For Writing On Sidewalks in Seattle: In various cities during the restive year of 2021, many protestors wrote on sidewalks and walls of government buildings. In Seattle, a person who “writes, paints, or draws any inscription, figure, or mark of any type on any public or private building or other structure or any real or personal property owned by any other person” is guilty of “property damage.” Seattle Municipal Code 12A.08.020. Protestors used sidewalk chalk and charcoal to write messages on a temporary wall erected outside a Seattle Police Department precinct building, and were charged under the Ordinance. In Tucson v. Seattle, No. C23-17 MJP, June 13, 2023, U.S. District Judge Marsha Pechman enjoined Seattle from enforcing the Ordinance because it was “both vague and overbroad.” Slip op., at 8. A key factor was that the “visual blight” the Ordinance targeted was temporary and would wash away in the rain (of which there is a significant amount in Seattle). “On its face, the Ordinance sweeps so broadly that it criminalizes innocuous drawings (from a child’s drawing of a mermaid to pro-police messages written by the Seattle Police Foundation that can hardly be said to constitute ‘visual blight’ and which would naturally wash away in the next rain storm. Based on the record before it, the Court finds the Ordinance fails to narrowly target the purported visual blight.” Slip Op., at 10.  Compare painting a slogan on a street where the paint itself “on” the street presented a safety issue. Plus, there was content discrimination, as shown in coverage by PubliCola including pictures of Seattle Police tweeting that sidewalk chalk was not illegal.

Reknowned law Professor Eugene Volokh isn’t entirely comfortable with this opinion: “I’m not sure whether the decision is entirely correct. But it does leave room, I think, for narrower ordinances, for instance ones that (1) forbid unauthorized writing that is much harder to remove than chalk, especially when it causes significant damage; (2) perhaps forbid even chalking in places, such as indoors, where the chalk can’t just be easily hosed off; or (3) provide for implied as well as express consent (as in the writing a note on a classmate’s notebook). The decision also doesn’t preclude private property owners from removing the writing, though query whether it would forbid the city from selectively hosing off some chalking on public property when it wouldn’t hose off other chalking.”

STATES

New Jersey Election Law Enforcement Commission Is Back In Business: Last March, all four members of New Jersey’s Election Law Enforcement Commission resigned to protest against new statutory rules they said “defanged” the government agency. Now the New Jersey Monitor reports that NJ Governor Phil Murphy has appointed four replacement Commissioners (h/t IFS). Not everyone is happy: Commission Director Jeff Brindle “has sued Murphy and top aides, alleging the Elections Transparency Act is “special legislation” barred by the state constitution, charging the governor’s aides attempted to force his resignation by leaking damaging emails, and claiming Murphy sought his ouster over an op-ed Brindle wrote that targeted candidates’ use of nonprofits with lax disclosure requirement.” Always a lot of excitement in Jersey campaign regulation.

States’ Primary Schedules Are Still Up In The Air: The Associated Press reports that (h/t ELB) “Months after the Democratic Party approved President Joe Biden’s plan to overhaul its primary order to better reflect a deeply diverse voter base, … Party officials now expect the process to continue through the end of the year — even as the 2024 presidential race heats up all around it.” (To some degree, so are Republican primaries.) AP also notes: “The DNC says it prepared for an arduous process, but is not too concerned by the uncertainty, in part because Biden faces only minor primary challengers.”

Did You Think Americans for Prosperity Foundation v. Bonta Would Stop States From Using Dragnets To Collect Donor Information? Think again. National Review has a short roundup of state efforts to evade the Supreme Court’s strong July 1, 2021, opinion striking down California’s “dragnet” collection (and repeated leaking) of hundreds of thousands of organizations’ confidential donor files. “[I]n the first six months of 2023, no fewer than 19 states have considered legislation that would compel diverse and even apolitical organizations to share private supporter information. They range from blue states to purple states to red states, with at least eight bills still pending.” One of the states now demanding donor files? California. Luke Wachob, from People United for Privacy, has more, (h/t IFS) including: “One state representative in North Dakota put his reasoning for wanting to expose Americans’ nonprofit donations in blunt terms: ‘I need to know who my enemies are.’ But the Supreme Court had an answer to that claim two years ago: No, you don’t.”

How Florida Democratic Party’s Self-Inflicted Wound Cost Elections: Long-time “political hack” Steve Schale offers “Anatomy of a Murder,” a deeply-personal account in The Bulwark+ of his and the Florida Democratic Party’s mis-steps after the Obama vote in 2012. “When I left the party job in 2009, I genuinely believed we were out of the ditch and on a better path. … Things were trending in the right direction for Democrats in Florida. But right about then, a new idea was floated: standing up a donor table—or alliance, if that makes you feel better—that would operate and fund organizations outside of the party. … My concern was that the alliance would not be an add-on, but instead would end up being a replacement for the party.”

Law Prof. Richard Pildes in ELB comments: “This was one of the more fascinating pieces I’ve read on the sources of weakness in modern state parties, how that weakness affects their competitiveness, and the role of non-party, outside donors in that process. We’ve known that the McCain-Feingold law caused enormous damage to state political parties, and it’s unclear what role that law might have played in the background. This story is primarily about outside donor alliances that think they can perform party functions better than the parties. The story is about the decline of the Democratic Party in Florida, written by a long-time Democratic political operative there. The whole story is worth reading.”

“Instead of Door-Knocking, They Were In The Casino” – Why Republican Turnout Efforts Were Sabotaged By Fraud: Speaking of undercutting party efforts, NBC News had a blockbuster report on Republicans nationally having their efforts similarly undercut by field teams that just don’t do the work they’re paid for.

A few weeks before last fall’s midterm elections, a paid canvasser in Nevada did what thousands of door-knockers across the country were doing: They went on an app and marked off the homes they had visited that day. There was just one problem. This canvasser never went anywhere near those homes in a neighborhood in south Las Vegas. They were 8 miles away, sitting inside Caesars Palace casino, according to geotracking data obtained by NBC News. … If this were an isolated episode, it’d be a minor nuisance. But it wasn’t. The large-scale voter contact effort that conservatives have put at the center of their political operations in recent years is plagued with issues, according to more than a dozen people who’ve worked in GOP-aligned field operations and internal data obtained by NBC News. Those issues include fraudulent and untrustworthy data entries, akin to what occurred in Nevada, as well as allegations of lax hiring practices and a lack of accountability.

Insiders contend that two of the closest Senate races in 2022 – Nevada and Georgia – could have been affected by the field effort sabotage. “One national GOP operative who’s overseen door-knocking campaigns estimated that in their experience “when it comes down to the actual cheating,” roughly “10 to 20% of the staff ends up getting fired.” This time it wasn’t outside organizations that hurt the Republicans, but the urgency of impending elections and inadequate supervision.

NBC suggests that Democrats do not have the same type of issues, because they rely less on paid door-knockers: “Though Democrats deal with some of the same door-knocking challenges, the party has built-in advantages for in-person canvassing, according to interviews with two Democratic canvassing veterans as well as with Republicans with similar experience. They include a more ready supply of younger volunteers, allies in organized labor offering union workers to hit the doors and a base of supporters who are more tightly concentrated in urban and dense suburban areas where canvassers can hit a lot more doors in a lot less time.”

Texas Intervenes in Harris County’s Election Administration: Election administration isn’t often a topic covered in Public Policy Advocacy Highlights, but this is an unusual situation. Harris County, home to Houston, one of America’s largest and most dynamic cities, is administratively a mess: its schools have been taken over by the State because they’re a disaster, other agencies routinely make massive errors, traffic is miserable, growth is unchecked and byzantine, and there are areas which are as much under siege by criminals as Chicago or Portland, Oregon. It is also a vast island of blue in a very red state, and it had its share of issues during the 2022 midterms.

Now liberal publication The Texas Tribune has a deep dive (h/t ELB) on moves by the State to take over another county agency: the election administration:

Texas Republicans have muscled through legislation allowing unprecedented state interventions into elections in Harris County, the most populous county in Texas, threatening to drastically overhaul elections in the Democratic stronghold. The bills targeting Harris, which would eliminate its chief elections official and allow state officials to intervene and supervise the county’s elections in response to administrative complaints, are headed to the governor’s desk. Lawmakers say they’re responding to repeated election issues in Harris County, which includes the city of Houston. The county, for its part, has signaled it will challenge the bid to remove its elections administrator and is portraying the bills as a partisan power grab and the latest in a series of legislative moves by Texas Republicans to tighten access to the ballot in the wake of the 2020 presidential election.

San Francisco Cracks Down on Nonprofit Spending In Wake of FBI and Other Investigations: The San Francisco Standard reports that the city “dishes out more than a billion dollars annually to nonprofit organizations, but the city’s oversight of those dollars has been the subject of growing scrutiny in the wake of scandals. On Tuesday, the Board of Supervisors passed a bill requiring nonprofits receiving city funds to submit tax and governance documents confirming their nonprofit status and to designate the city administrator as the sole collector of such information. The bill, which was sponsored by Supervisor Ahsha Safaí, passed unanimously.” Some of the organizations “received largely glowing reviews from city agencies last year, not long before they were accused of mismanaging public funds.”

GENERAL

NY Times: Koch Network to Raise $70 Million “For Push To Sink Trump:” Maggie Haberman of the New York Times reports, based on various internal communications that appear to have been leaked, that

The political network established by conservative industrialists Charles and David Koch has raised more than $70 million for political races as it looks to help Republicans move past Donald Trump, according to an official with the group. With some of this large sum to start, the network, Americans for Prosperity Action, plans to throw its weight into the GOP presidential nominating contest for the first time in its nearly 20-year history. The network spent nearly $500 million supporting Republican candidates and conservative policies in the 2020 election cycle alone. …

The Koch network’s goal in the 2024 presidential primaries, which has been described only indirectly in written internal communications, is to stop Trump from winning the Republican nomination. In February, a top political official in the network, Emily Seidel, wrote a memo to donors and activists saying it was time to “have a president in 2025 who represents a new chapter.” …

With seven months until the primaries, the Koch coalition of conservatives is still searching for who its influential and wealthy donors believe can take down the former president, a reflection of a broader paralysis among anti-Trump Republican donors who have watched in shock as Trump’s poll numbers have held despite two indictments. A memo that circulated inside the Koch network this month made the case that Trump’s renomination was not inevitable, arguing that the issue of electability could still weaken him.

Where Did The Donors Go? Conflicting articles struggle to explain why the number of donors to tax-exempt organizations have declined more than the total amount of giving to charity. The Nonprofit Times reported that Giving USA 2023: The Annual Report on Philanthropy for the Year 2022, a report published by Giving USA Foundation, found that “Giving to nonprofits in the United States plunged during 2022, led by the disappearance of individual donors. Giving dropped to an estimated $499.33 billion – down 3.4% in current dollars and 10.5% after adjusting for inflation from a revised total of $516.65 billion in 2021.” Authors at Indiana University blamed “Inflation, economic uncertainty, individuals returning to previous giving levels after the pandemic surge and the decline in the number of donors” for the drop.

A second Nonprofit Times article noted that a different Better Business Bureau study, also conducted by Indiana University researchers, found that “donor disconnect is multi-level” and “Younger people are less likely to say they’ve stopped donating to charity because they can’t afford to give and more likely to say it’s because they don’t feel like they have been asked or don’t feel connected to the charity.” And a third report from Nonprofit Times reported that the Center for Effective Philanthropy in Cambridge, Massachusetts, found that “Nonprofits entered this year on a more positive financial footing that many leaders initially feared during the pandemic and the high inflationary period that followed. Many also are continuing to enjoy the fruits of an increased level of trust from funders whose philanthropic giving proved vital in tiding them over these last few years.”

One significant difference between the studies is that the more positive reports come from organizations which rely more on foundation or high wealth donors, rather than smaller, individual donors. Key to the higher donations, according to the CEP study: “streamlined grant application processes, removal of restrictions on the use of grants, and receipt of multi-year funding from foundations.” Another way of looking at these results is that, contrary to reports that greater disparity of wealth indicates that the wealthy are less charitable and civic-minded, higher-income donors are shoring up tax-exempt organizations in a time of peril.

Another article from CNBC wondered why conservative donor Peter Thiel’s foundation gave $3 million, its second-largest gift of 2021, to the left-leaning New Venture Fund, part of the Arabella Advisors network. Various personages expressed confusion about the gift, which probably simply reflects the fact that donors are rarely as simplistic as media stereotypes suggest, and Thiel has long confounded media coverage.

TechSoup Offers Guide for Tax-Exempt Organizations Using ChatGPT: Even if AI isn’t taking over the world, a lot of people want to know how to use it. TechSoup, which provides information and discounted products to tax-exempt organizations registered with various companies that provide discounts to tax-exempts (like Microsoft and Adobe), has a brief blog post on how to use ChatGPT to help nonprofits. “You can use ChatGPT to save time, generate insights, and boost day-to-day productivity at your organization. We’ll go over some ‘prompting’ tips you can use, as well as some ways that ChatGPT can help nonprofits’ everyday needs. We’ll also cover a few limitations to be aware of when using this technology.”

Characterizations, editorial comments, abbreviations and shorthand references are solely PPA Highlights author Barnaby Zall’s, and do not necessarily 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.

IRS

Ten Years Later, the IRS Targeting Scandal Continues to Stir Debate: So opines long-time Tax Notes Editor Fred Stokeld (firewall). Among other comments, David Keating, President of the Institute for Free Speech and a co-leader of the First Tuesday Lunch Group, told Stokeld: “The fundamental problem is that the IRS knows nothing about free speech or Supreme Court First Amendment jurisprudence, which is hardly surprising given its tax collection and compliance mission,” … As a result, the IRS guidance on political activity is unconstitutionally vague. When lines aren’t drawn clearly, that lack of clarity creates an environment for abuse.”

Other coverage of the anniversary was limited. Law Prof. and founder and Chairman of the Institute for Free Speech Brad Smith wrote in the Washington Examiner: “Until and unless Congress acts to get the IRS out of the speech-policing business altogether, courts should find current IRS rules unconstitutionally vague on the same First Amendment grounds that have guided the courts when considering FEC rules.” Matt Nese commented in Reason magazine (“Every American has the right to support causes they believe in without fear of harassment, intimidation, or discrimination from the tax collector. Ten years after the IRS unveiled one of the most shameful scandals in its history, it’s high time for Congress to offer lasting solutions.”);

FEC

FEC Approves New Audit Procedures: At its May 3 meeting, the Federal Election Commission approved new procedures for audits of political action committees that do not receive federal funds. Chair Dara Lindenbaum and Commissioner Trey Trainor issued a memo explaining the changes and the reasons they were needed.

The new process is designed to be faster and save both the Commission’s and committees’ resources. The new process encourages Audit staff to request, and the committee to provide, all documents as early in the process as possible. Further, to expedite the resolution of legal questions arising in an audit, committees will be provided with OGC’s legal analysis at the exit conference with an opportunity to meaningfully respond, and to seek resolution of the issue by the Commission.

The new process also reduces the report writing burden on Audit by requiring only two reports. These efficiencies and procedural protections will benefit the Commission, committees, and the public. The new process also promotes transparency. For example, the Commission will now publish on its website non-confidential documents related to any findings at the conclusion of audits, such as ads and independent expenditures. The public will now have the benefit of seeing the documents underpinning certain legal determinations that the Commission made during the audit process. The publication of these documents will promote transparency, help ensure consistency in results across audits raising similar legal issues under similar fact patterns, and promote the orderly development of the law.

DoJ

When Top DoA Officials Included Outside Lobbyist Eric Kessler on Policy Email Chains and Discussions Did They Lose Their Ability to Use FOIA Exemption Five? Fox News reported on May 16 that Secretary of Agriculture Tom Vilsack and his staff included Eric Kessler, a co-founder of progressive powerhouse consulting and management firm Arabella Advisors, on email chains reflecting discussion of policy policy changes involving the meat industry. Executive Branch officials have long included discussions with representatives of interest groups in policy deliberations. Many of the specifics of the emails released under a Freedom of Information Act request filed by Americans for Public Trust, however, were redacted under the exception for pre-decisional discussions that have not been reduced to policy documents. Leaving aside the question of whether the pre-decisional FOIA Exception 5b actually applied in this case, the inclusion of an outside participant may also undercut the agency’s argument for using Exception 5 as claimed. Since NLRB v. Sears, Roebuck, 421 U.S. 132, 153 (1975), the standard has been “Exemption 5, properly construed, calls for ‘disclosure of all “opinions and interpretations” which embody the agency’s effective law and policy, and the withholding of all papers which reflect the agency’s group thinking in the process of working out its policy and determining what its law shall be.’” The Court compared the pre-decisional exemption to the usual attorney-client confidentiality, which is abrogated when a third-party is included in such discussions. 421 U.S. at 154.

Other questions could be raised by the Supreme Court’s recent decision in Percoco, discussed below under Courts, such as whether the outside lobbyist’s participation gives rise to an honest services liability for Kessler himself. One hopes that the DoA officials consulted with agency lawyers before including the outside lobbyist in these discussions.

Did Social Media Monitor DataMinr Give U.S. Marshals Advance Warning of Pro-Abortion Demonstrators? Recently, much attention has been paid to the FBI and other Department of Justice agencies who were alleged to have been biased against conservative organizations, particularly in monitoring and trying to censor social media activities. Now a different DoJ agency, the U.S. Marshals Service, has been reported by The Intercept as having used a wide-ranging Twitter “official partner’s” product called Dataminr to predict demonstrations by pro-abortion organizations. “Internal emails show that the U.S. Marshals Service received regular reports from Dataminr, a company that persistently monitors social media.” The Marshals protect, among other things, courts and jurists, and this particular set of warnings was produced in the aftermath of the Supreme Court’s recent decision reversing Roe v. Wade.

DoJ Issues New FARA Advisory Opinions, Including on “Virtual Entity Presence” Triggering Registration Requirement: The Department of Justice issued several new Advisory Opinions interpreting the Foreign Agent Registration Act. Covington has an explainer, which does note that they may “contain little actionable guidance.” For example, “The FARA Unit concluded in one recent advisory opinion that a U.S. online platform was required to register under FARA for ‘creat[ing] a virtual entity presence’ for a foreign government agency and ‘displaying that presence on’ the company’s platform”, which DoJ interpreted as meaning that the U.S. platform would be considered a “publicity agent” for the foreign government sufficient to trigger registration.

CONGRESS

House Committees Oversight Priorities Include Regular Tax-Exempt Organization Priorities, Not Many Weaponization Controversies: A new report from the House Committee on Oversight and Accountability includes plans and authorization for all 118^th Congressional oversight Committees. As discussed in the latest First Tuesday Lunch Group meeting, there’s nothing in the official plans that describes “weaponization” or other concerns that sparked interest after the 2022 midterm elections in oversight hearings over the operations or politicization of tax-exempt organizations. Covington offers a general overview.

Ways & Means: The submission from the Ways and Means Committee covers pretty straightforward and non-controversial topics:

• Tax-Exempt Organizations. Oversight of federal tax laws, regulations, and filing requirements that affect tax-exempt organizations, particularly charities, foundations, and political groups operating as social welfare organizations. Evaluate overall IRS efforts to monitor tax-exempt organizations, identify areas of non-compliance, prevent abuse, and ensure timely disclosure to the public about tax-exempt organization activities and finances. Review IRS tax-exempt application process and agency oversight of new exempt organizations.

P. 227

There is a section on Security of Taxpayer Information, which includes: “Examine leaks of confidential taxpayer information in recent years to determine how these egregious leaks occurred and evaluate whether congressional action is needed to make sure such leaks do not happen again.” P. 228.

Judiciary: After the last election, Committee leaders spoke about various investigatory topics involving tax-exempt organizations. For example, Judiciary Subcommittee on Crime and Federal Government Surveillance Chair Andy Biggs invoked the 2010 Lois Lerner-led IRS targeting scandal and said: “The queries in the IRS interrogatory [to the Adams, Baldwin and Covey Foundation] are ‘a form of government surveillance of the American people, … There is no authority for the IRS to regulate speech.” Biggs’s Subcommittee, however, did not report any specific plans for an investigation into the IRS’s treatment of tax-exempt organizations.

The Judiciary Subcommittee on the Weaponization of the Federal Government did report priority plans to “examine how executive branch agencies work with, obtain information from, and provide information to the private sector, non-profit entities, and other government agencies to facilitate action against American citizens, including the extent, if any, to which illegal improper, unconstitutional, or unethical activities were engaged in by the executive branch or private sector against citizens of the United States …” and “issues related to the protection of civil liberties of citizens of the United States, including whether the civil liberties of citizens of the United States have been violated by executive branch agencies.”  P. 134-35.

House Administration: The House Administration Committee announced oversight priorities to “examine the role and impact of political organizations and non-profit organizations on federal elections.” Pp. 12, 26.

New Intelligence Superagency – The Foreign Malign Influence Center – Spools Up In the Director of National Intelligence’s Office: The many, many new federal agencies dealing with foreign “malign influence” both globally and within the United States have a new cat-herder: the Foreign Malign Influence Center, now within the Office of the Director of National Intelligence (DNI). Basically, the new FMIC is poised to become a new federal manager of efforts to limit American social media, election activity, and other activities that might affect “public opinion within the United States.” 50 U.S.C. § 3059(f)(2)(B). Because other, identical efforts within other agencies have gone so well …

The Intercept says the new Center has received a mixed reception. The Center is now operational to herd the other federal “offices dedicated to fighting foreign disinformation [that] are springing up like daisies” like the Pentagon’s new “Influence and Perception Management Office,” and the four separate new parts of the Department of Homeland Security, as well as in the Department of Justice, the FBI and the State Department. Director of National Intelligence Avril Haines told the Senate Armed Services Committee on May 4 that the Center “encompasses our election threat work, essentially looking at foreign influence and interference in elections, but it also deals with disinformation more generally.”

The DNI and its predecessors always had staff checking foreign activities in the United States, as did other organizations like the Department of Justice.  But, in the wake of concern over foreign “misinformation” and “disinformation” and other foreign shenanigans on social media and otherwise, in 2019, Congress added a new “primary organization in the United States Government for analyzing and integrating all intelligence possessed or acquired by the United States Government pertaining to foreign malign influence.” 50 U.S.C. § 3059. And Congress shortened the name on December 23, 2022, so that new primary organization is now to be known as the Foreign Malign Influence Center (changed from “Influence Response”), and is responsible for combatting “malign influence,” statutorily defined as

any hostile effort undertaken by, at the direction of, or on behalf of or with the substantial support of, the government of a covered foreign country with the objective of influencing, through overt or covert means—

(A) the political, military, economic, or other policies or activities of the United States Government or State or local governments, including any election within the United States; or (B) the public opinion within the United States.

50 U.S.C. § 3059(f)(2).

And, although Russia, Iran, North Korea, and China are named as being covered by the new Center, the Center’s Director can designate any other foreign country to be  covered as “appropriate.” “Exposing deception in defense of liberty” is the center’s motto, ODNI’s website says. It enjoys access to “all intelligence possessed or created pertaining to FMI [foreign malign information], including election security.”

Hopefully, the new Center’s Director can sing better tunes than the previous occupant of the similar DHS office.

Bipartisan FARA Enforcement Act Reintroduced: How often do you see Sen. Sheldon Whitehouse team up with five conservative Senators on legislation? Not often, but together, Sens. Whitehouse, Grassley, Rubio, Young, Cornyn and Graham have reintroduced the same Foreign Agents Registration Act reform bill that passed three Senate Committees in 2019, but didn’t progress further. Lead sponsor Chuck Grassley said: “This bill gives the Justice Department new tools to detect and deter secret foreign lobbying and ensures policymakers and the American public know when influence campaigns are being pushed by foreign interests. The bill is the product of years of negotiations and congressional oversight, and it’s time we get it on the books.”

COURTS

Briefing In Former New York Superintendent of Financial Services Maria Vullo’s Response on NRA v. Vullo Has Been Extended to June 23, 2023: As expected, the Respondent in NRA v. Vullo, No. 22-842, which asks whether a government regulator may use indirect threats to censor a tax-exempt organization’s advocacy, requested and received an extension of time to respond to the Petition for Certiorari. The delay likely pushes back the Court’s decision to grant cert until at least mid-summer, and any merits briefing even later.

Meanwhile, an additional four amicus briefs have been filed supporting the Petition, including one from the States of Texas and Indiana which, like the earlier brief filed by 18 other States, is likely to be influential with some Justices.

Supreme Court Rejects “Honest Services” Public Corruption Conviction of Joseph Percoco, Former Aide to NY Gov. Cuomo: And speaking of Gov. Cuomo’s powerful aides benefitting from their relationships, one former Cuomo aide had his conviction for “honest-services fraud” reversed. As reported in last November’s Public Policy Advocacy Highlights, the Supreme Court did not seem receptive to the expansive interpretations of corruption used by federal prosecutors to indict and convict a former close aide to New York Governor Andrew Cuomo. On May 11, the Court overturned Joseph Percoco’s conviction because, at the time he received payments from a construction company which wanted to use his expertise and friendship with the Governor, he was not a government employee, but was Cuomo’s campaign chair. “Percoco was convicted of this offense based on instructions that required the jury to determine whether he had a ‘special relationship’ with the government and had ‘dominated and controlled’ government business. We conclude that this is not the proper test for determining whether a private person may be convicted of honest-services fraud”.

Percoco resigned his post as Cuomo’s Executive Deputy Secretary to become his re-election Chair, and accepted the money only days before returning to his government job. The key question was whether private individuals could owe a duty to the public similar to that of government employees and certain contractors who accepted that duty as part of becoming agents of the government. Percoco asked the Court whether a private person who “has informal political or other influence over governmental decisionmaking can be convicted of honest-services fraud.” The Court looked back to Skilling v. United States, 561 U. S. 358 (2010), which had upheld an honest-services fraud conviction of a person “engaging in such schemes [who] had sufficient reason to know that their conduct was proscribed.” Id., at 407, 410, 412. An agent of the government may be considered to have such knowledge. Slip op., at 9. But just having domination or control over governmental business because of a special relationship to a government official was not enough, even if government employees relied on that relationship to listen to the private person. Id., at 9-10. The Court would not, for example, use some “ill-defined” standard of how much influence a lobbyist or close colleague had: “the jury instructions did not) define “the intangible right of honest services” “‘with sufficient definiteness that ordinary people can understand what conduct is prohibited,’” or “‘in a manner that does not encourage arbitrary and discriminatory enforcement’,” citing McDonnell v. United States, 579 U. S. 550, 576 (2016).

In other words, political insiders, lobbyists, and friends or family of government officials do not automatically become subject to honest-services fraud prosecutions. Prosecution and conviction require a special showing that such a relationship actually involved the relevant government officials’ acquiescence in the exercise of government power sufficient to generate a duty to the public to provide honest services. That relationship does exist, but it wasn’t shown in this case. Slip op., at 11. Could it be shown in the Dept. of Agriculture policy discussion and email chain including a third-party outside lobbyist discussed above under DoJ? An interesting question.

How Does the Warhol Decision Affect “Fair Use?”  The recent decision in Warhol Foundation v. Goldsmith, has many in the world of fine art concerned about chilling derivative works, and legal experts are divided on whether the fear is well-grounded. Many tax-exempt organizations rely on “fair use” as a wide-ranging defense to copyright demands and claims, but Goldsmith requires a deeper analysis than most shorthand uses suggest. The key for most tax-exempt organizations will indeed be in whether the claimed infringement was primarily “of a commercial nature or is for nonprofit educational purposes.” 17 U.S.C. § 107(1); slip op. at 14. “First, the fact that a use is commercial as opposed to nonprofit is an additional ‘element of the first factor.’ The commercial nature of the use is not dispositive. But it is relevant.” Slip op., at 18. “In sum, the first fair use factor considers whether the use of a copyrighted work has a further purpose or different character, which is a matter of degree, and the degree of difference must be balanced against the commercial nature of the use. If an original work and a secondary use share the same or highly similar purposes, and the secondary use is of a commercial nature, the first factor is likely to weigh against fair use, absent some other justification for copying.” Slip op., at 19-20. That weight became irresistible here, because although the Warhol Foundation was a nonprofit, it was charging high prices to license its version of Goldsmith’s photo, indicating that its primary use of the photos was not for educational purposes, but commercial. And that was enough to undercut its fair use defense.  

Supreme Court Clerk Sometimes Enforces Newly-Relaxed Notice Paragraph Requirement: Effective last January, the Supreme Court removed the Rule 37.2 requirement that amicus briefs need consent from the parties for submission, but left in the requirement that the parties’ counsels require at least ten days’ notice of an intention to file a brief. Now the Clerk’s Office has begun enforcing that notice requirement. So far, however, it appears that enforcement is not uniformly applied, as some briefs whose filers have not given notice remain on the docket without further action (at least for a while).

D.C.D.C. Judge Transparent About Her Favoritism: Judge Ana Reyes, newly-appointed to the U.S. District Court for D.C. issued the usual standing order instructing counsel about her take on various procedural matters, and, on page four, included the following (h/t Law Prof. Eugene Volokh and longtime practitioner Arthur Spitzer):

g. Oral Argument. …

ii. The Court understands that, for reasons passing understanding, not all counsel are fans of the Boston Red Sox. Counsel should be aware, however, that the Court may reference key moments in Red Sox history during oral argument. References may include: (a) Dave Roberts’s steal; (b) Carlton Fisk’s walk-off homerun; (c) Ted Williams’s final at-bat; and, inter alia, (d) David Ortiz’s “this is our [bleep] city” speech. Any reference to Game 6 of the 1986 World Series is strictly prohibited….

You’ve been warned.

DON’T USE ChatGPT to Write Your Briefs: YIKES! Speaking of warnings of a much more consequential form, how about this blistering and damning opinion (h/t Law Prof. Eugene Volokh) from the Southern District of New York (always a fountain of kindness and courtesy in the best of circumstances): “The Court is presented with an unprecedented circumstance.  A submission filed by plaintiff’s counsel in opposition to a motion to dismiss is replete with citations to non-existent cases.” When questioned, the lawyer admitted one of his firm’s lawyers had used ChatGPT to write the briefs, and noted that ChatGPT itself doubled down on its falsity when he asked the program whether these were real cases and the program responded that they were. Both lawyers are now subject to showings for sanctions … and likely deserve them. Even worse, later coverage indicated that ChatGPT is now writing briefs and memos in classes and in Big Law firms and by self-represented parties which make up as much as half the filings in some courts. Don’t be that lawyer (or nonlawyer).

STATES

Minnesota, a One-Party State, Enacts Election Law Changes, Including Reporting Expansion and Barring “Foreign-Influenced” Campaign-Related Expenditures: Courthouse News reports that the Democratic Farmer Labor Party now controls all three branches of the State’s government and has enacted several new policies. “More controversially, the bills would create new disclosure requirements for would-be election advertisers and pamphleteers, closing loopholes that allow them to avoid reporting their political activities if they don’t expressly advocate for or against a candidate or ballot question using certain words, and bar ‘foreign-influenced’ corporations and nonprofits from spending money to influence elections.” The term “foreign-influenced” is quite broad, including foreign investors who indirectly beneficially own 1% of an organization and any organization with a principal place of business in another country. Note that this definition also covers ballot questions, and requires the “foreign-influenced” entity to report within seven days of making any contribution. About $1.5 million in state funds are appropriated for implementing and enforcing the new laws in the next few years.

Have Clients Engaging in Voter Registration Efforts in Florida? Check the New Florida Law: Many non-political tax-exempt organizations engage in some fashion with voter registration (that is, beyond just telling people to be engaged in the election process). On May 24, Florida Gov. Ron DeSantis signed a new law which includes important new criminal sanctions against voter registration organizations which do not follow new rules. Some of these rules are broad, including “A third-party voter registration organization that collects voter registration applications serves as a fiduciary to the applicant and shall ensure, that any voter registration application entrusted to the organization, irrespective of party affiliation, race, ethnicity, or gender, is promptly delivered to the division or the supervisor of elections in the county in which the applicant resides within 10 days after the application is was completed by the applicant, but not after registration closes for the next ensuing election.” § 97.0575(5), Fla. Stat. (as amended). Democracy Docket has a general summary. The new law has been challenged in court by a variety of organizations claiming that it will target Black and Latinx voter registrants. (H/t ELB.)

Voter Fraud in Texas: Texas Monthly goes on a deep dive (h/t Law Prof. Richard Pildes in ELB) into how 15 voters, including police officers, illegally registered in the city of Laredo to help elect a councilwoman in a razor-close election, plus bonus coverage of historical (LBJ’s missing ballot boxes) and recent descriptions of voter fraud in the Lone Star state.

GENERAL

Bad News for News Media: AP Poll Finds Americans No Longer Trust or Believe News Media, and Think It Is Responsible for Much Political Polarization: An Associated Press poll on May 1 found that

When it comes to the news media and the impact it’s having on democracy and political polarization in the United States, Americans are likelier to say it’s doing more harm than good. Nearly three-quarters of U.S. adults say the news media is increasing political polarization in this country, and just under half say they have little to no trust in the media’s ability to report the news fairly and accurately, according to a new survey from The Associated Press-NORC Center for Public Affairs Research and Robert F. Kennedy Human Rights. … The survey reveals the complicated relationship many Americans have with the media: A majority rate in-depth and investigative reporting as very helpful or extremely helpful for understanding the issues they care about, but they are more likely to say they regularly scan the headlines than read an in-depth investigative article. And while overall trust in the media is low, a majority of respondents say the media is doing at least somewhat well in covering issues they care about.

In related news, the polling company YouGov reported on public trust in specific media outlets. The good news is that one media outlet was considered Trustworthy or Very Trustworthy by 62% of Americans, twenty points ahead of any other media source. The bad news is that the trustworthy news source was IBM-owned The Weather Channel. Traditional mainstream media outlets ABC, CBS and NBC were in the 42% range (meaning more people did not find them trustworthy than found them trustworthy), and the other measured outlets were below that range.

A College-Level Lesson on the Perils of Risk Managers: Law Prof. Jonathan Turley writes in The Hill about the latest college furor over speech on campus, this time at venerable Oberlin College where students were frantic over the appearance of Kalinda Watson, a risk management expert.

Characterizations, editorial comments, abbreviations and shorthand references are solely PPA Highlights author Barnaby Zall’s, and do not necessarily 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.

IRS

Danny Werfel, Part Deux, Takes Over as IRS Commissioner: The first time Danny Werfel became Commissioner, the Internal Revenue Service was in turmoil, following the Lois Lerner-led 2010-13 “targeting” scandal in which the Service’s Exempt Organizations Division selected organizations for intensive review on the basis of their names and perceptions of whether they were conservative. He lasted seven months, before leaving “quietly” as John Koskinen took over to “heal” the IRS.

This time, Werfel came in as the 50^th Commissioner to “heal” the IRS by spending billions in new appropriations. “This is our moment in history,” he told Service employees. The Service’s official “tracker” shows great progress: in the last twelve months, the IRS was able to “clear” all error-free returns in its backlog, but much of that took place before Werfel took over. Still, Treasury took a well-deserved victory lap. “The IRS achieved 87% Level of Service.” Apparently, it cost 1% of the $80 billion to achieve that level of service. Not everyone is on board; former Service employees are now saying (paywall) that $80 billion “won’t be enough.”

In other Werfel news, dueling media perspectives on the $80 billion IRS funding increase: Reuters reports that “the agency will not hire any armed auditors with $80 billion in new funding, an attempt to dispel Republican assertions the IRS plans to build an ‘army’ of 87,000 armed agents.” Fox Business, on the other hand, notes that the armed agents are not likely to be auditors, but Criminal Investigators: “IRS special agents within the CI division are the only IRS employees who are authorized by law to carry and use firearms.” We in the trade know them as “Gold Badges,” as in “if you see a Gold Badge, stop whatever you’re doing and call me right away!”

And the New York Post notes that “IRS Commissioner Daniel Werfel promised Thursday that his agency won’t retaliate against whistleblowers when asked about an official alleging a coverup in the tax fraud investigation of first son Hunter Biden.” Background from New York Times: “As Justice Department officials weigh whether to indict Hunter Biden, the investigator overseeing the Internal Revenue Service’s portion of the case has come forward with allegations of political favoritism in the inquiry that stand to add to the already fraught circumstances facing the department.”

Watch What You Say – Applicant Seeking to Create a Political Party in a Foreign Country Denied (c)(3) Status Because It Said It Was A Political Party, When It Might Not Have Been One: Lesson in Denial 202316001: don’t tell the IRS you’re a “political party” and then try explain why you’re really not. The organization was explicit about the fact that it is a political party and it therefore does not meet the organizational test. However, they may well not have met the standard under U.S. law for being “partisan.” From the facts in the denial letter:

Your Bylaws state you are a “civil democratic party” based on E citizenship where the law prevails and protects the rights of all. You will seek to win over the E people in the United States, to make their sound heard. You will organize demonstrations to support the cause of E people. You will establish long-term political relations between the immigrants to the United States from D and the American people. You gain public opinion and mobilize American organizations to make the American people aware of the crisis in D . . . Your party’s goal is to support the cause politically and morally toward change in D and to support the people of D by collecting donations from people, charitable organizations, and civil society organizations. You submitted a document which describes this political party. It discusses unity, freedoms, and building society as well as “building the state.” Building the state “includes infrastructure, departments, institutions, services, law, and placing the individual in the right place.”

The organization said it would not support or oppose candidates in political campaigns, despite its attestation that it was a “political party.” The IRS took this “political party” language at face value, despite the other facts in the application that suggested this classification may not actually be applicable and there could be language barriers or other issues at play. The Service declared the organization to be an “action organization” under Treas. Reg. Section 1.501 ( c )(3 )-1 ( c )(3 )(iii), which provides that an organization is an “action” organization if it participates or intervenes, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office. “You are dissimilar to the organization described in Rev. Rul. 66-256 because you are not conducting balanced public forums on political or international issues. Rather, you are creating and supporting a specific foreign political party, which will include the establishment of laws, which is a non-exempt purpose. This substantial non-exempt purpose, as explained in Better Business Bureau of Washington, D.C., Inc. [v. United States, 326 U.S. 279 (1945)], destroys your claim for exemption regardless of the number or importance of truly exempt purposes.”

Best practice: don’t assume your readers, especially at the Service, will understand and agree with your perspective and expertise when you draft materials for them. They are not going to give you the benefit of the doubt unless you explain why your client deserves it. More succinctly: remember that good writers write to be understood; great writers write not to be misunderstood.  

D.C. District Court Denies Exemption to Church Because RFRA Does Not Supersede Illegality and Public Policy Doctrines: In the mellifluously-named Church of the Lukumi Babalu Aye v. City of Hialeah, 508 U.S. 520 (1993), a unanimous Supreme Court ruled that the public sacrifice of live chickens on the courthouse steps was a protected religious practice and an ordinance prohibiting the practice, even one predicated on public health and safety and the prevention of cruelty to animals, was a violation of religious freedom. “Although the practice of animal sacrifice may seem abhorrent to some, ‘religious beliefs need not be acceptable, logical, consistent, or comprehensible to others in order to merit First Amendment protection.’ Thomas v. Review Bd. of Indiana Employment Security Div., 450 U. S. 707, 714 (1981).”

But tax-deductibility is different. So, in Iowaska Church of Healing v. United States, that principle ran up against the IRS’s traditional illegality and public policy doctrines which bar charitable exemption, even to churches, who violate the law or long-established public policies like racial exclusion. The Iowaska Church believed deeply in the practice of using Ayahuasca, a tea brewed from South American plants that contain a chemical deemed illegal under U.S. drug laws. Even the sweeping Religious Freedom Restoration Act doesn’t override the IRS’s ability to deny charitable status under the illegality and public policy doctrines. The Service denied the church’s Form 1023 Application for Exemption on the grounds that the church was not organized and operated exclusively for exempt purposes because Ayahuasca is illegal under federal law and violates public policy. The church then sued the IRS claiming that this violated the church’s rights under RFRA. The DEA grants permits for religious exemptions to the federal ban on Ayahuasca use, but the IRS wouldn’t grant the exemption without this permit – which was pending at the time the 1023 was denied and the organization filed suit. The court issued a summary judgment in favor of the IRS, agreeing with the IRS that the church doesn’t qualify under section 501(c)(3) unless it gets a permit exempting its Ayahuasca use, because of the illegality doctrine. The court also found that plaintiff lacked standing under the Religious Freedom Restoration Act because IRS exemption would not allow the church to use Ayahuasca legally – it needs DEA approval to do that.

Ironically, this organization did not have to file the Form 1023 that set off this series of legal proceedings. As a church, it would be exempt from that requirement. Much of this hassle could have been avoided had the church either not filed the 1023 application in the first place, or at least waited until being granted a DEA permit for the use of the drug in its ceremonies.

FEC

FEC and DoJ Sign MoU to Share Information, and Not Everyone Is Happy: For fifty years, the Federal Election Commission has had exclusive responsibility for civil law enforcement of the federal campaign finance laws, with special attention to balancing the First Amendment rights of Americans against the federal government’s interests in preventing quid pro quo corruption. The U.S. Department of Justice has had the responsibility for enforcing criminal laws that affect elections and political activity. The two agencies’ organic (foundational) laws are different, their procedures are different, and their sensitivities to First Amendment rights are decidedly different. See, for example, Jack Smith’s 2010 post-Citizens United attempt to use criminal law enforcement against tax-exempt organizations which were engaged in what he believed was too much political activity, until Lois Lerner (yes, THAT Lois Lerner of the IRS targeting scandal) shut him down.

Now the FEC and the DoJ have entered into an updated Memorandum of Understanding on sharing information between the two agencies. The two agencies “agree to assist each other in fulfilling their respective statutory responsibilities and to cooperate, consistent with all legal restrictions, to further their respective enforcement activities.” ¶ 5. The two agencies “do not intend to engage in joint fact-gathering, joint investigation or litigation strategy, or joint charging determinations,” ¶ 9, but DoJ may ask the FEC to suspend its activities during a parallel DoJ criminal investigation. ¶ 10. There are many paragraphs which deal with overlapping communications and responsibilities, which are supposed to be ironed out through inter-agency discussions.

Not everyone is pleased with the MoU; Commissioner Trey Trainor called it “a dark day … for our Republic”, … “Not since the Alien and Sedition Acts of 1789 has there been a more grievous affront to the First Amendment than what we have before us today”, and:

This Memorandum of Understanding (MOU) is harmful to the free, public discourse of ideas, and the transparency mission of this agency, in four significant ways. First, there is no statutory authority for this agency to enter into such an information sharing agreement with another executive branch agency. Second, this MOU will significantly, and I believe irreparably, harm the level of candor between the entities that are regulated by the Federal Election Campaign Act (“FECA”) and this agency. Third, I believe there are significant Constitutional concerns that are implicated in this type of MOU. Finally, as a matter of policy, this MOU is just another example of the recent move to criminalize the participation of the American people in the necessary open exchange of ideas which is the foundation of our political system.

“Data” About Newest Buzzword for Concern About Too Much Money In Politics – “Joint Fundraising Committees” – Produces Mixed Messages: Washington Post breathlessly points out that raising money for multiple political committees at the same time “circumvents laws … [and] gives large donors ever-greater power to buy influence with candidates” by writing many checks at one event. David Byler, a “data columnist” for the Post, writes: “in practice, much of the money flows to the national party … The Post’s Chris Zubak-Skees calculates that, in 2016, for example, state-level Republican parties sent 90 percent of their cut of the Trump Victory Fund to the Republican National Committee. In 2020, they sent 96 percent to the RNC.” But it appears that sometimes the percentage of funds flowing to the national parties went down in 2020: “Meanwhile, Democratic state parties sent three-quarters of their haul from the Hillary Victory Fund to the DNC in 2016. In 2020, state parties gave about a quarter of their take to the DNC.”

Byler’s main point is confused: “fundraising is an arms race. … [But] In the end, reforming how joint fundraising committees operate won’t stop the deluge of funds pouring into our political system from moneyed interests.”

DoJ

Former Head of SBA Pleads Guilty to Looting Two Exempt Organizations: Hector Barreto, who had been head of the federal Small Business Administration, and health care consultant Miguel Gutierrez, were accused of conspiracy to file false tax returns, mail fraud and wire fraud. The U.S. Attorney’s office in San Antonio, Texas, listed more than a page of alleged fraudulent transactions between the pair and two tax-exempt organizations. Both pled guilty.

Three Sentenced to Prison for “Scam PAC” Fraud: Speaking of fraudulently using tax-exempt organizations (which includes Political Action Committees, tax-exempt under IRC § 527), the Department of Justice announced guilty verdicts against three people who raised $4 million for “scam PACs” that told donors they were supporting 2016 presidential candidates Clinton and Trump, who never received the money. One received ten years in prison, the other two were sentenced to seven and five years.

CONGRESS

Rubio: ActBlue Must Be Held Accountable For Fraud Caused By Not Requiring CCV On Credit Card Contributions: Sen. Marco Rubio has sent a letter to the Federal Election Commission requesting answers of why the Democratic-fundraising juggernaut ActBlue has not been investigated for allegedly garnering illegal campaign contributions. (h/t IFS) “[R]eports indicate that numerous individuals, including senior citizens, have purportedly donated to ActBlue thousands of times a year. … many of these individuals had no idea that their names and addresses were being used to give thousands of dollars in political donations.” Rubio’s main complaint is that ActBlue has not required donors using credit cards to enter a CCV (Credit Card Value) number, when everybody else does.

The FEC responded to Rubio by pointing out that federal law “does not impose requirements for specific safety or security guardrails that political committees must use to accept online donations.” So it doesn’t mandate use of a CCV.

COURTS

“Does the First Amendment Allow a Government Official to Make Threats Like a Mob Boss?” More on NRA v. Vullo, from the Institute for Free Speech and from the Federalist Society. The Petition for Cert is now scheduled for consideration at the Supreme Court’s conference on May 11. Three amicus briefs were filed supporting the Petition, including one from 18 states asking the Court to take the case. New York did not file an opposition to the Petition, and UCLA law Prof. Eugene Volokh, counsel of record on the Petition, pointed out that the Court rarely grants cert without calling for a response first. And, on April 24, the Court did call for a response; note that it only takes one Justice to ask for a response, not the four that triggers review.

And the same issue jumped onto front pages nationwide when the Walt Disney Company filed suit against the State of Florida for violating its freedom of speech. “A targeted campaign of government retaliation — orchestrated at every step by Governor DeSantis as punishment for Disney’s protected speech — now threatens Disney’s business operations, jeopardizes its economic future in the region, and violates its constitutional rights,” said the company in its complaint. Significant differences between the two situations, but same issue underneath it all.

U.S. District Court Explores IRS Third-Party Summons Details: Last month the Supreme Court of the United States heard oral argument in Polselli v. IRS, No. 21-1599, considering when the IRS must give notice to a taxpayer when it subpoenas confidential information from a third party. Now the U.S. District Court for Kansas has handed down God’s Storehouse Topeka Church v. U.S, going into great detail on the procedures and process involved in those IRS third-party subpoenas.  Law Prof. Darryll Jones discusses many other issues in this case in his blog. (H/t Beth Kingsley and Dick Riley)

CFPB Appeals Loss in Attempt to Censor Speech Using Anti-Discrimination Laws: In 2020, the Consumer Financial Protection Board, a controversial federal agency with a vast jurisdiction, filed a novel “anti-redlining” lawsuit against Townstone Financial, a small Chicago-area mortgage original company; the suit alleges that Townstone’s comments on radio ads and programs about neighborhood crime rates discourages African-American prospective applicants from applying for mortgages. “Since at least 2014, Townstone has engaged in acts or practices directed at prospective applicants that, together and separately, would discourage prospective applicants, on the basis of race, from seeking or obtaining credit for properties within the Chicago MSA.” Amended Complaint, ¶ 22. The Complaint does not provide any examples of consumers who were discouraged by Townstone’s statements on the air, and includes only examples of statements in Townstone’s “infomercials” such as “it’s crazy in Markham on weekends. …You drive very fast through Markham, … and you don’t look at anybody or lock on anybody’s eyes in Markham … You look at your dashboard, you don’t lock on anybody.” Id., ¶ 33. In other words, this case is a clash between the First Amendment and anti-discrimination laws enforced, in part, by the CFPB.

As John Berlau and Stone Washington of the Competitive Enterprise Institute wrote in the Wall Street Journal: “the CFPB is signaling that it may attempt to punish anyone who complains about neighborhood crime.” Townstone’s counsel at the Pacific Legal Foundation noted “speaking about controversial topics is not illegal—even for mortgage companies. Unfortunately, the CFPB is armed with some vague laws and regulations that the agency claims allow it to decide what creditors are, and are not, allowed to say.”

The agency lost at the District Court. In a Feb. 3 opinion, Judge Franklin Valderrama rejected the CFPB’s claims because the agency did not present actual evidence that any applicant had been deterred, only a risk that prospective applicants had been deterred: “the Court finds that, when applying step one of Chevron, it cannot defer to Regulation’s anti-discouragement provision of with respect to ‘prospective applicants,’ no matter how desirable it might be to do so as a policy matter.”

The CFPB has now appealed to the Seventh Circuit. Richard Andreano, Jr., of Ballard Spahr, noted in a client memo that an appeal “would appear to be a risky move. … If the Seventh Circuit ruled in favor of the CFPB, then Townstone could seek Supreme Court review, and the CFPB would likely face an uphill battle if the Court took the case.”

Meanwhile, the Supreme Court granted cert in a case asking directly whether the long-standing Chevron deference rule, at the heart of this case, has run its course. The Petition in Loper Bright Enterprises v. Raimondo, No. 22-451, asks, flat out: “Whether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.” The case is a little fishy, since it involves the National Marine Fisheries Service’s requirement that not only must ocean-going fishing vessels provide quarters for the federal agents who supervise the vessel, but pay their salaries as well. The ambiguity in the scope of the statutory delegation of authority to regulate the boats to the NMFS gives rise to the Chevron deference question of whether the agency has the authority to impose the cost, which the Petitioners allege will take away 20% of their annual returns. The Court has come close to reviewing Chevron several times recently, but the Court’s grant of cert in Loper Bright expressly limited the Question Presented to overruling Chevron, making this the culmination of this movement. Could be a very important decision.

DoJ Resurrects “First Amendment Waived By Tax Deductibility” Theory That the Supreme Court Has Already Rejected Many Times: In Americans for Prosperity Foundation v. Bonta, 141 S. Ct. 2373 (2021), the Supreme Court found that the California Attorney General’s “dragnet” collection of donor information violated the First Amendment, holding among other things, that “[i]t is hardly a novel perception that compelled disclosure of affiliation with groups engaged in advocacy may constitute as effective a restraint on freedom of association as [other] forms of governmental action”, quoting, NAACP v. Alabama ex rel. Patterson, 357 U. S. 449, 462 (1958). NAACP v. Alabama involved this chilling effect in its starkest form.” In other words, the Supreme Court found that requiring tax-exempt organizations to disclose their donors was “compelled disclosure,” subjecting the government’s requirement to at least “exacting scrutiny.”

Yet, in a mind-boggling Motion to Dismiss in Buckeye Institute v. Internal Revenue Service, No. 2:22-cv-4297-MHW-EPD, (S.D. Ohio, April 4, 2023) (h/t IFS, which is counsel for plaintiff) the Department of Justice, citing AFPF v. Bonta, denied that requiring disclosure of donors (which is what AFPF v. Bonta and NAACP v. Alabama were about) was compelled disclosure at all. “Buckeye is challenging a condition of receiving preferential tax treatment, not a rule compelling disclosure.” Motion to Dismiss, 27.

Those are not opposites, or even different things: in this case, as the DoJ motion itself noted, “if they choose to accept a subsidy in the form of tax benefits to support their activities, they must comply with the reasonable conditions that Congress has determined are appropriate, including the requirement to disclose their substantial contributors.” Id., at 28. In other words, the rule compelling disclosure IS the unconstitutional condition, just as it was in AFPF v. Bonta and NAACP v. Alabama. As the Court’s opinion in AFPF v. Bonta said: “As part of an effort to oust the organization from the State, the Alabama Attorney General sought the group’s membership lists. Id., at 452–453. We held that the First Amendment prohibited such compelled disclosure. Id., at 466.” AFPF, slip op. at 7, citing NAACP (emphasis added). If the DoJ assertion were true, neither AFPF nor the NAACP would have been able to bring its case.

Nor is this the first time DoJ has promoted this theory that accepting a tax “subsidy” requires giving up important First Amendment rights. For example, in AFPF v. Bonta itself, the DoJ told the Supreme Court 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.” Brief of the United States, at 12. The Supreme Court has expressly rejected that theory many times, including in AFPF v. Bonta, Rumsfeld v. Forum for Academic and Institutional Rights, 547 U.S. 47, 59 (2006) (“the First Amendment supplies ‘a limit on Congress’ ability to place conditions on the receipt of funds’”); Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 570 U.S. 205, 2014–15 (2013) (“AOSI I”) (“[T]he relevant distinction that has emerged from our cases is between conditions that define the limits of the government spending program—those that specify the activities Congress wants to subsidize—and conditions that seek to leverage funding to regulate speech outside the contours of the program itself”); Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 140 S. Ct. 2082, 2086 (2020) (“AOSI II”) (same).

In other words, even Congress cannot insist on a funding condition that goes beyond the limits of the government spending program it wants to subsidize or “conditions that seek to leverage funding to regulate speech outside the contours of the program itself.” AOSI I, 570 U.S. at 214–15, citing FCC v. League of Women Voters of Cal., 468 U.S. 364, 399–401 (1984) (condition struck because the effect of ban on editorials went beyond limits of congressional program). “By demanding that funding recipients adopt—as their own—the Government’s view on an issue of public concern, the condition by its very nature affects ‘protected conduct outside the scope of the federally funded program’.” AOSI I, 570 U.S. at 219, quoting Rust v. Sullivan, 500 U.S. 173, 197 (1991). What is true for speech is also true for freedom of association and petition for redress of grievances. NAACP v. Alabama, 357 U. S. at 462 (“[i]t is hardly a novel perception that compelled disclosure of affiliation with groups engaged in advocacy may constitute as effective a restraint on freedom of association as [other] forms of governmental action”).

STATES

New Jersey’s Sweeping “Elections Transparency Act” Sparks “Considerable Controversy” Over Changes for Tax-Exempt Organizations, Donors, and Government Contractors: Turmoil continues, including the resignation of all four members of the New Jersey Election Law Enforcement Commission. Venable has a good summary of the changes.

California Moves to Restrict Referenda: California has long been the most active State in direct democracy, both for initiatives and referenda. Now there’s a move to restrict referenda; note that California is effectively a one-party State, and the effort is being pushed by Democratic-leaning unions and environmental activists. Contrasting views on the move: the once-staid, now very progressive Los Angeles Times is for it; the more conservative California Chamber of Commerce is not. (H/t Pepperdine Law Prof. Mark Scarberry on ELB)

GENERAL

Eugene Volokh on the Supreme Court, Lincoln, and “Liberty:” UCLA Law Professor Eugene Volokh has been serializing his presentation to a Wisconsin Law Review symposium on “Is the Supreme Court Out of Control?” The fourth installment looks to the Court and the concept of liberty, and Volokh quotes Abraham Lincoln at the height of the Civil War:

The world has never had a good definition of the word liberty, and the American people, just now, are much in want of one. We all declare for liberty; but in using the same word we do not all mean the same thing. With some the word liberty may mean for each man to do as he pleases with himself, and the product of his labor; while with others the same word may mean for some men to do as they please with other men, and the product of other men’s labor. Here are two, not only different, but incompatible things, called by the same name—liberty. And it follows that each of the things is, by the respective parties, called by two different and incompatible names—liberty and tyranny.

The shepherd drives the wolf from the sheep’s throat, for which the sheep thanks the shepherd as a liberator, while the wolf denounces him for the same act as the destroyer of liberty, especially as the sheep was a black one. Plainly the sheep and the wolf are not agreed upon a definition of the word liberty; and precisely the same difference prevails today among us human creatures, even in the North, and all professing to love liberty. Hence we behold the processes by which thousands are daily passing from under the yoke of bondage, hailed by some as the advance of liberty, and bewailed by others as the destruction of all liberty.

Banzhaf Files Complaint Against Stanford Law School and Students Who Silenced Federal Judge: Retired George Washington University Law Professor John Banzhaf, a renowned public interest lawyer who coined the term “legal activism” for using the law “as a powerful, largely untried, untested, tool or weapon to change, to prove the public interest and to change the world,” is best known for fighting against smoking tobacco. Now he’s directing his attention to the Stanford Law School and its students for its now-infamous hecklers’ veto of Fifth Circuit Judge Kyle Duncan’s presentation to the school’s Federalist Society on March 9. It wasn’t enough that Law School Dean Jenny Martinez issued an apology to Duncan and a substantive constitutional legal memorandum to the students, Banzhaf decided, since neither the students nor the students received sufficient punishment for their legal and pedagogical violations. Banzhaf filed a California State Bar complaint against the students for illegal violations of the First Amendment. Banzhaf told Palo Alto Online in an interview that:

‘And as a number of people said, if they go out of law school with these ideas that this is OK and proper, it could be incredibly dangerous because the kids from Stanford and Yale are going to wind up in these top positions. … I think it’s very important that the (students) understand what the law is. If you don’t like a law, if you don’t like what a judge has written, then the answer is to fight back using the law — use your unique legal skills.”

Australian Offers an “Insider’s Guide to “Anti-Disinformation:”  Andrew Lowenthal, “a progressive-minded Australian who for almost 18 years was the Executive Director of EngageMedia,” pens a “guide” (h/t IFS) that shows how the concept of “anti-disinformation” has supplanted protecting and expanding digital rights and freedoms: “For most of my career, I believed strongly in the work I was doing, which I believed was about protecting and expanding digital rights and freedoms. … In recent years, however, I watched in despair as a dramatic change swept through my field. As if all at once, organizations and colleagues with whom I’d worked for years began de-emphasizing freedom of speech and expression, and shifted focus to a new arena: fighting ‘disinformation.’”