No. 16-743

IN THE

Supreme Court of the United States

INDEPENDENCE INSTITUTE

Appellant,

v.

FEDERAL ELECTION COMMISSION,

Appellee.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

BRIEF OF STATE POLICY NETWORK

AND 24 STATE PUBLIC POLICY GROUPS

AS AMICI CURIAE IN SUPPORT OF APPELLANT

Robert Alt Steven A. Engel

THE BUCKEYE INSTITUTE Counsel of Record

88 East Broad Street, Christopher M. Trueax

Suite 1120 DECHERT LLP

Columbus, Ohio 43215 1900 K Street, NW

(614) 224-4422 Washington, D.C. 20006

Counsel for Amicus Curiae (202) 261-3300

The Buckeye Institute steven.engel@dechert.com

Counsel for Amici Curiae
i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES..................................... iii

INTEREST OF THE AMICI CURIAE ......................1

SUMMARY OF ARGUMENT....................................2

ARGUMENT ..............................................................5

I. The First Amendment Protects

the Rights of 501(c)(3) Nonprofits

To Seek To Influence Legislative

Action in Ways Unrelated to

Elections................................................5

A. The Court Has Recognized

that Freedom of

Association Depends Upon

the Right To Anonymity. ...........7

B. The Court Subjects

Mandatory Disclosure

Provisions to Exacting

Scrutiny. .....................................9

II. The Government Cannot

Demonstrate an Interest in

Regulating Genuine Issue

Advertisements by 501(c)(3)

Nonprofit Organizations.....................13

A. The Justification for

Mandatory Disclosure

Provisions Do Not Apply to

Issue Ads. .................................14
ii

TABLE OF CONTENTS

(Cont’d)

Page

B. There Is Even Less of a

Justification for

Regulating the Issue

Speech of 501(c)(3)

Organizations, Which Are

Barred from Political

Activity. ....................................15

C. BCRA Imposes Substantial

Burdens on 501(c)(3)

Groups. .....................................19

III. The States Have Built Upon

BCRA’s Overbroad Foundations

and Thus Imposed Additional

Burdens on 501(c)(3) Nonprofits. .......22

CONCLUSION .........................................................25

APPENDIX A ................................................... APP. 1
iii

TABLE OF AUTHORITIES

Page

CASES

AFL-CIO v. FEC,

333 F.3d 168 (D.C. Cir. 2003) .......................................19

Bates v. City of Little Rock,

361 U.S. 516 (1960) .........................................................8

Branch Ministries, Inc. v. Rossotti,

211 F.3d 137 (D.C. Cir. 2000) .......................................16

Buckley v. Valeo,

424 U.S. 1 (1976) .............................................3, 9, 10, 11

Citizens United v. Fed. Election Comm’n,

558 U.S. 310 (2010) ................................................passim

Federal Election Commission v. Wisconsin

Right to Life, Inc.,

551 U.S. 449 (2007) ................................................passim

Globe Newspaper Co. v. Superior Court,

457 U.S. 596 (1982) .........................................................8

Independence Inst. v. Fed. Election Comm’n,

No. 14-cv-1500 (D.D.C. Nov. 3, 2016)....................10, 18

Lovell v. City of Griffin,

303 U.S. 444 (1938) .........................................................8

McConnell v. Fed. Election Comm’n,

540 U.S. 93 (2003) ..................................................passim
iv

TABLE OF AUTHORITIES

(Cont’d)

Page

McIntyre v. Ohio Elections Comm’n,

514 U.S. 334 (1995) .............................................3, 6, 7, 8

NAACP v. Ala. ex rel. Patterson,

357 U.S. 449 (1958) .................................................6, 8, 9

Roberts v. U.S. Jaycees,

468 U.S. 609 (1984) .........................................................9

Roth v. United States,

354 U.S. 476 (1957) .........................................................5

STATUTES AND REGULATIONS

26 U.S.C. § 527(b)................................................................16

26 U.S.C. § 955(b)(1)...........................................................15

26 U.S.C. § 4955(a)(1) .........................................................15

52 U.S.C. § 30104(f)(3)(A)(i) ..............................................22

52 U.S.C. § 30104(f)(3)(A)(i)(I)-(II)....................................14

52 U.S.C. § 30104(f)(3)(C) ..................................................14

Bipartisan Campaign Reform Act of 2002

Pub. L. 107-155, 116 Stat. 81..................................passim

Pub. L. 114-223, 130 Stat. 857 (2016) .................................19

26 C.F.R. § 1.501(c)(3)-1(c)(3)(iii)......................................15
v

TABLE OF AUTHORITIES

(Cont’d)

Page

Ala. Code § 17-5-2(a)(6)......................................................22

Fla. Stat. Ann. § 106.011......................................................22

Fla. Stat. Ann. §§ 106.0703(1)(b) and (3)(a)(1)...................23

Idaho Code Ann. § 67-6602(f) .............................................23

10 Ill. Comp. Stat. 5/9-1.14..................................................23

Mass. Gen. Laws ch. 55, § 1 ................................................22

Oklahoma Ethics Law § 257:1-1-2 ......................................22

Utah Code Ann. § 20A-11-901 ............................................23

OTHER AUTHORITIES

Dick M. Carpenter II, Disclosure Costs: Unintended Consequences of Campaign Finance

Reform, INST. FOR JUSTICE (2007), available at http://www.ij.org/disclosure-costs........................20

Nicholas Confessore et al., Confusion and Staff

Troubles Rife at I.R.S. Office in Ohio, I.R.S.

Office in Ohio, N.Y. TIMES, MAY 18,

2013, available at

http://www.nytimes.com/2013/05/19/us/pol

itics/at-irs-unprepared-office-seemedunclear-about-the-rules.html ..........................................18
vi

TABLE OF AUTHORITIES

(Cont’d)

Page

Letter from Arthur Eisenberg, Legal Director,

NYCLU, to Rob Cohen, N.Y. State Joint

Commission on Public Ethics at 6-7 (Apr.

24, 2014), available at

http://jcope.ny.gov/source_funding/forms/2

014-04-24-NYCLU%20appeal.pdf;...............................20

Federal Election Commission Advisory Op.

2012-38 (Apr. 25, 2013), available at

http://saos.fec.gov/aodocs/AO%202012-

38.pdf..............................................................................21

Federal Election Commission, Campaign

Guide for Corporations and Labor

Organizatons, available at

http://www.fec.gov/pdf/colagui.pdf ...............................23

Gallup, 2016 Global Civic Engagement Report,

available at

http://www.gallup.com/reports/195581/glo

bal-civic-engagement-report2016.aspx?g_source=CATEGORY_CIVIC

_PARTICIPATION&g_medium=topic&g_

campaign=tile ...................................................................7

Thomas Kaplan, Nonprofits Are Balking at

Law on Disclosing Political Donors, N.Y.

TIMES, Aug. 20, 2013, available at

http://http://www.nytimes.com/2013/08/21/

nyregion/citing-safety-nonprofits-balk-atlaw-on-disclosing-donors.html.......................................20
vii

TABLE OF AUTHORITIES

(Cont’d)

Page

Seth F. Kreimer, Article: Sunlight, Secrets, and

Scarlet Letters: The Tension Between

Privacy and Disclosure in Constitutional

Law, 140 U. PA. L. REV. 1, 11 (1991) .............................21

Lilly Family School of Philanthropy, Indiana

University–Purdue University at

Indianapolis, Giving USA 2016: The

Annual Report on Philanthropy for the

Year 2015 (2016)..............................................................6

Lilly Family School of Philanthropy, Indiana

University—Purdue University at Indianapolis, Giving USA 2016 Infographic, available at givingusa.org/see-the-numbers-giving-usa-2016-infographic .................................................2

William McGeveran, Mrs. McIntyre’s Checkbook: Privacy Costs of Political Contribution Disclosure, 6 U. PA. J. CONST. L. 1, 19

(2003) .............................................................................21

Rev. Rul. 2007-41; 2007 IRB LEXIS 495,

(I.R.S. 2007) .............................................................16, 17

S. 2845, 108th Cong. (2004) ................................................19
viii

TABLE OF AUTHORITIES

(Cont’d)

Page

Daniel J. Solove, Modern Studies in Privacy

Law; Notice, Automony and Enforcement

of Data Privacy Legislation, Access and

Aggregation: Public Records, Privacy and

the Constitution, 86 MINN. L. REV. 1137,

1178 (2002).....................................................................21

Eugene R. Tempel, ed., HANK ROSSO’S

ACHIEVING EXCELLENCE IN FUND RAISING

440 (2d ed. 2003)............................................................20
1

INTEREST OF THE AMICI CURIAE1

Amici curiae consist of the State Policy Network

(“SPN”) and 24 of its members, 501(c)(3) nonprofit corporations, that advocate on matters of public policy

and interest throughout all fifty states. See Appendix

A. SPN is committed to improving the practical effectiveness of independent, non-profit, market-oriented,

state focused think tanks. SPN advises and represents the interests of many nonprofits, including

amici and Appellant the Independence Institute. Together, amici stand for the interests of countless nonprofits and the people associated with them who,

through so much time and generosity, contribute to

America’s robust civil society and work to address

some of society’s most pressing problems.

Because amici are organized as 501(c)(3) nonprofits, they do not engage in partisan political speech or

activity, and are strictly prevented from doing so by

the Internal Revenue Code (“IRC”). Instead, amici

must, and do, restrict their communications to political speech pertaining to issues of public policy that affect the way people live their lives.

The mandatory disclosure provisions of the Bipartisan Campaign Reform Act (“BCRA”), as upheld by

the District Court below, impose serious burdens on

the ability of amici to engage in genuine issue advocacy. BCRA’s overbroad definition of “electioneering

1 No counsel for a party authored this brief in whole or in part,

and no counsel or party made a monetary contribution intended

to fund the preparation or submission of this brief. No person

other than amici curiae or its counsel made a monetary contribution to its preparation or submission. Counsel for the parties received timely notice of the intent to file this brief and have consented to its filing.
2

communications” forces them either to restrict the

timing and content of their speech or to publicly disclose their financial donors, who often do not wish to

be publicly identified with a potentially controversial

issue campaign. SPN and its many member-affiliate

nonprofits therefore have a direct stake in the outcome of this case.

SUMMARY OF ARGUMENT

This appeal presents an issue of fundamental importance to First Amendment law—whether the Government may require a private, nonpartisan group,

engaged in the genuine discussion of public policy, to

publicly disclose the identity of its financial supporters.

Over one million nonprofit organizations contribute to the richness of American civil society by seeking

to address social problems, to promote political discussion, and to advance the passions and interests of citizens. In recent years, over $373 billion has been donated to these nonprofits to fund their work—work

that has a direct impact on people’s lives in every way

imaginable.2 Many of these donations are made anonymously by people who wish to keep their generosity

private.

BCRA’s disclosure obligation chills the speech and

activities of nonprofits by requiring public disclosure

of those donors, based on the content of speech. This

Court has recognized that such disclosure may be permissible where such speech, expressly or implicitly,

2 See Lilly Family School of Philanthropy, Indiana University—

Purdue University at Indianapolis, Giving USA 2016 Infographic, available at givingusa.org/see-the-numbers-giving-usa2016-infographic.
3

advocates for or against the election of a political candidate. See McConnell v. Fed. Election Comm’n, 540

U.S. 93, 206 (2003). However, BCRA’s definition of

“electioneering communications” sweeps well beyond

such partisan activity and encompasses the bona fide

exchange of ideas, where such expression is completely divorced from the outcome of any election.

Under this Court’s precedents, such mandatory

disclosure provisions indisputably impose a genuine

burden on protected First Amendment speech. See,

e.g., McIntyre v. Ohio Elections Comm’n, 514 U.S.

334, 355-57 (1995); Buckley v. Valeo, 424 U.S. 1, 68

(1976) (per curiam). It must similarly be uncontested

that such burdens on speech may not be overbroad,

but must be substantially related to a sufficiently important government interest. Citizens United v. Fed.

Election Comm’n, 558 U.S. 310, 366-67 (2010).

As applied here, BCRA’s mandatory disclosure

provision cannot possibly withstand such “exacting

scrutiny.” Id. The Independence Institute is a

501(c)(3) nonprofit corporation, which is prohibited

from engaging in partisan political speech or activity.

The speech at issue concerns a bipartisan bill for sentencing reform and makes but a passing mention of

Colorado’s two incumbent Senators, encouraging voters to reach out to them to support the pending bill.

The advertisement does not in any way resemble the

“functional equivalent of express advocacy,” i.e.,

speech “intended to influence the voters’ decisions”

and likely to “have that effect.” McConnell, 540 U.S.

at 206. Accordingly, the FEC cannot meet its burden

of demonstrating a sufficiently important interest

here.
4

Many political candidates are also sitting members

of Congress who are responsible to their constituency

for pending legislation and other constituent services.

501(c)(3) organizations that speak about policy matters or about pending legislation have the fundamental First Amendment right to encourage the public to

speak with legislators about such bills. That right

does not go away simply because a primary or general

election may be on the horizon. To the contrary, given

that Congress may well take up bills in the weeks before an election, the BCRA provision threatens to silence genuine issue advocacy that stands at the heart

of the First Amendment.

This Court has never upheld an effort by the Government to force a nonprofit corporation to disclose its

financial supporters where the speech was not the

functional equivalent of express advocacy. Such mandatory disclosure regulations violate our tradition of

safeguarding the right to freely speak and associate,

including anonymously—a right that ensured the vibrant debate that secured both our Nation’s independence and the adoption of the Constitution, and that

has protected unpopular speakers in the two hundred

and forty years since.

The 501(c)(3) nonprofits whose rights are at issue

already face heavy burdens from the Internal Revenue Service, which seeks to ensure that they do not

use their tax exemption to engage in electoral advocacy. Imposing BCRA’s disclosure regime on such

genuine issue speech exposes these charities to burdensome, duplicative regulations, and chills their

speech in multiple ways. The statute limits what nonprofits can say and when they can say it, creates additional legal uncertainty, and deters donors who fear
5

the threat of stigmatization, violence, and simple invasion of privacy, that may result from public disclosure.

While the District Court upheld a provision of federal law, the question presented here is not limited to

BCRA and federal elections. A number of the States

have built on BCRA’s already overbroad foundations

by passing even more burdensome disclosure laws

that chill still more speech. Absent this Court’s correction of the decision below, SPN and its member-affiliates will remain compelled to deal with this burgeoning influx of state electioneering communications

laws. Compliance with all these laws is burdensome

and expensive, and it will cause many nonprofits

simply to stay silent.

The First Amendment is rests upon the value of

robust political debate. The question in this case is

not whether disclosure is a less restrictive means of

regulating express advocacy, but whether Congress

has the power to regulate genuine issue advocacy at

all, particularly by nonpartisan speakers, such as the

Appellant. The judgment of the District Court should

be reversed.

ARGUMENT

I. The First Amendment Protects the Rights of

501(c)(3) Nonprofits To Seek To Influence Legislative Action in Ways Unrelated to Elections.

Our American democracy is premised upon the

“unfettered interchange of ideas for the bringing

about of political and social changes desired by the

people.” Roth v. United States, 354 U.S. 476, 484

(1957). Throughout our history, people have joined to-
6

gether to advocate for their point of view and to advance their interests. See McIntyre, 514 U.S. at 360-

61 (Thomas, J., concurring) (documenting the history

of anonymous pamphleteering to affect political

change in America’s founding era); 3 Alexis de Tocqueville, Democracy in America 902 (1840) (“In [America,] the science of association is the mother science;

the progress of all the rest depends on its progress.”).

Today, people associate together through nonprofits

and charities, which may in turn pursue their objectives by urging fellow citizens and elected representatives to take action to address pending social problems.

Over one million nonprofit organizations exist in

America, and collectively they are involved with almost every pursuit imaginable, ranging from

healthcare and religion, to education, the humanities,

and public policy. See Lilly Family School of Philanthropy, Indiana University—Purdue University at Indianapolis, Giving USA 2016: The Annual Report on

Philanthropy for the Year 2015 (2016). By joining together, people with like-minded views can strengthen

their voices to advocate for the pursuits, goals, and

policies of their supporters. See, e.g., NAACP v. Ala.

ex rel. Patterson, 357 U.S. 449, 460 (1958) (“Effective

advocacy of both public and private points of view,

particularly controversial ones, is undeniably enhanced by group association.”).

Financial donations to nonprofits are crucial to

their ability to function. And a lot of money is at

stake. Last year, over $373 billion in charitable contributions made it possible for the many nonprofit organizations to conduct their work and fulfill their missions. See Annual Report on Philanthropy for the Year
7

2015, supra. This figure places America among the

most generous countries in the world in terms of charitable giving. See id.; Gallup, 2016 Global Civic Engagement Report, available at http://www.gallup.com/reports/195581/global-civic-engagement-report2016.aspx?g_source=CATEGORY_CIVIC_PARTICIP

ATION&g_medium=topic&g_campaign=tile. The

work of these nonprofits, which touches on every facet

of American life, greatly benefits American life and

enhances the strength of our civil society.

Some of the goals that these 501(c)(3) organizations pursue are controversial. Whether these organizations seek to advance free trade or to protect the

rights of workers; whether they seek the legalization

of illegal immigrants or to secure our borders; whether

they advocate in support of same-sex marriage or oppose such initiatives, these organizations may engender strong disagreement and controversy. In cases

such as those, and others, it is not uncommon for financial supporters to seek to preserve their anonymity. And the First Amendment unquestionably protects their right to do so.

A. The Court Has Recognized that Freedom of Association Depends Upon the Right To Anonymity.

The First Amendment protects the rights of these

501(c)(3) organizations to enjoy the freedom of association. This Court has long recognized that a corollary

of that right is the protection to associate anonymously. See McIntyre, 514 U.S. at 357 (anonymous

speech and association are “not a pernicious, fraudulent practice, but an honorable tradition of advocacy
8

and dissent”); see also Globe Newspaper Co. v. Superior Court, 457 U.S. 596, 604 (1982) (“The First

Amendment is . . . broad enough to encompass those

rights that, while not unambiguously enumerated in

the very terms of the Amendment, are nonetheless

necessary to the enjoyment of other First Amendment

rights.”).

The right to speak anonymously helped pave our

way to independence and to the adoption of our Constitution. The Court has described such forms of

speech as “historic weapons in the defense of liberty,

as the pamphlets of Thomas Paine and others in our

own history abundantly attest.” Lovell v. City of Griffin, 303 U.S. 444, 452 (1938). “There is little doubt

that the Framers engaged in anonymous political

writing. The essays in the Federalist Papers, published under the pseudonym of ‘Publius,’ are only the

most famous example of the outpouring of anonymous

political writing that occurred during the ratification

of the Constitution.” McIntyre 514 U.S. at 360

(Thomas, J. concurring). Anonymous speech stands

as a “shield from the tyranny of the majority,” id. at

357 (majority opinion), and without it, our civic discourse would be impoverished.

In the Civil Rights era, the Court recognized this

link between freedom of speech and freedom of association. There has rarely been doubt in this country

that “[e]ffective advocacy of both public and private

points of view, particularly controversial ones, is undeniably enhanced by group association.” NAACP,

357 U.S. at 460. Yet the “[d]isclosure of membership

lists is likely to have” a “deterrent effect on the free

enjoyment of the right to associate.” Id. at 466; see

also Bates v. City of Little Rock, 361 U.S. 516, 524
9

(1960) (the compulsory disclosure of group membership is “a significant encroachment upon personal liberty”).

Laws that hinder group association are suspect because “we have long understood as implicit in the

right to engage in activities protected by the First

Amendment a corresponding right to associate with

others in pursuit of a wide variety of political, social,

economic, educational, religious, and cultural ends.”

Roberts v. U.S. Jaycees, 468 U.S. 609, 622 (1984) (collecting cases). “[S]tate action which may have the effect of curtailing the freedom to associate is subject to

the closest scrutiny.” NAACP, 357 U.S. at 460-61.

B. The Court Subjects Mandatory Disclosure Provisions to Exacting Scrutiny.

This Court has recognized that the Government’s

interest in preventing the appearance of corruption

and in ensuring an informed electorate may extend towards requiring the disclosure of those who contribute

funds towards speech that seeks to influence elections. McConnell, 540 U.S. at 196. Because disclosure

laws can impose a significant burden on speech, however, the Court has emphasized that such laws must

be subject to “exacting scrutiny” and may only be sustained if they are substantially related to a sufficiently important government interest. Citizens

United, 558 U.S. at 366-67; McConnell, 540 U.S. at

201-02; Buckley, 424 U.S. at 64.

Under this “strict test,” Buckley, 424 U.S. at 66,

the burden is on the government to demonstrate “a

‘sufficient relation’ between the disclosure requirement and a ‘sufficiently important’ governmental interest.” Citizens United, 558 U.S. at 366-67 (quoting
10

Buckley, 424 U.S. at 64, 66). This test ensures that

the freedom to speak and associate freely are not curtailed without an extremely strong and compelling

reason, because to undermine that right is to chip

away at the bedrock of our democracy. Buckley, 424

U.S. at 80-81 (recognizing disclosure requirements for

unambiguously campaign-related speech are sufficiently linked to an important government purpose

because they “increase the fund of information concerning those who support the candidates”). Exacting

scrutiny requires courts to undertake a facts and circumstances inquiry to ensure a “sufficient relation”

exists between the government’s interest and the laws

burdening free speech. See Citizens United, 558 U.S.

at 368 (reviewing proposed documentary in a holistic

way and focusing on its “pejorative references to [Hillary Clinton’s presidential] candidacy”).

The District Court read this Court’s more recent

precedents to have altered these principles, and specifically to have upheld BCRA’s disclosure provisions

against any and all challenges. Independence Inst. v.

Fed. Election Comm’n, No. 14-cv-1500, at *13-15

(D.D.C. Nov. 3, 2016). Yet this Court has never upheld these provisions as applied to a genuine issue advertisement, such as the one in this case. See Buckley, 424 U.S. at 80-81 (discussing regulation of “unambiguously campaign related” speech). To the contrary,

each of the Court’s recent decisions has emphasized

that disclosure provisions remain subject to heightened scrutiny and must be justified on the facts of the

case. See, e.g., Citizens United, 558 U.S. at 366-67;

McConnell, 540 U.S. at 201-02; Buckley, 424 U.S. at

64.
11

In McConnell, this Court upheld BCRA’s mandatory disclosure regime against a facial challenge. The

Court found that BCRA targeted the growing prevalence of “sham” issue ads, which had grown out of the

bright-line limits on “express advocacy,” which had

been established by Buckley v. Valeo. McConnell, 540

U.S. at 126-28. By avoiding the use of “magic words”

like “vote for” or “against” a political candidate, organizations would avoid triggering the federal election

regulations, but still attempt to influence the election,

often in a patently obvious way. Id.

McConnell observed that these types of “sham” ads

were “functionally identical” to advocacy speech, even

though they masqueraded as issue ads. Id. at 126.

Buckley’s definition of express advocacy did not articulate the constitutional limit on speech subject to regulation, and in fact, the “majority” of issue ads

amounted to the “functional equivalent” of express advocacy. Therefore, the Government could justify

BCRA’s definition of “electioneering communications”

against the facial challenge that had been brought in

that case. See id. at 206. At the same time, the Court

expressly “assume[d] that the interests that justify

the regulation of campaign speech might not apply to

the regulation of genuine issue ads.” Id. at 206 n.88.

This Court confirmed that genuine issue speech remained free from regulation in Federal Election Commission v. Wisconsin Right to Life, Inc., 551 U.S. 449

(2007) (“WRTL II”). There, the Court reviewed proposed advertisements in a holistic, contextual approach and concluded that the ads were “not the functional equivalent of express advocacy”; as such, the

BCRA regulatory regime did not apply to them. 551

U.S. at 476.
12

The Court emphasized that “a court should find

that an ad is the functional equivalent of express advocacy only if the ad is susceptible of no reasonable

interpretation other than as an appeal to vote for or

against a specific candidate.” WRTL II, 551 U.S. at

469-70. In making this determination, courts should

look at the content of the ad to see whether they focus

on legislative or policy issues, or whether they mention an election, candidacy, or political party. Id.

Citizens United too is consistent with the distinction between genuine issue ads and express advocacy.

There, a 501(c)(4) entity (which in contrast to a

501(c)(3) organization is expressly permitted to engage in political advocacy), challenged BCRA’s limits

on corporate speech in the context of a political documentary directed at opposing the candidacy of Hillary

Clinton. 558 U.S. at 325. The Court emphasized that

Clinton was campaigning for the presidency and the

documentary portrayed her as corrupt, problematic,

and ultimately, an ineffectual leader. Id. at 325-26.

The film “contained pejorative references to her candidacy,” rendering it improbable the film was intended to do anything but oppose her election. Id. at

368. Accordingly, the Court held that “the film qualifies as the functional equivalent of express advocacy.”

Id. at 326.

Citizens United then went on to uphold BCRA’s

disclosure requirements as applied to the communication at issue. To be sure, the Court did reject Citizens

United’s “contention that the disclosure requirements

must be limited to speech that is the functional equivalent of express advocacy.” Id. at 369. Yet the case in

fact involved express advocacy, and the speech came

from a 501(c)(4) organization permitted to engage in
13

the electoral process. While the Court observed that

“disclosure is a less restrictive alternative to more

comprehensive regulations of speech,” id., the Court

had no occasion to explain how “exacting scrutiny”

would apply, or what interest the Government could

advance, in a case involving genuine issue speech,

such as that at issue here.

Accordingly, as the Court recognized in Wisconsin

Right to Life, it remains true that “[t]his Court has

never recognized a compelling interest in regulating

ads . . . that are neither express advocacy nor its functional equivalent.” WRTL II, 551 U.S. at 476. Nor has

the Court applied mandatory disclosure regulations to

genuine issue speech that was not intended to influence an election, such as the speech at issue here. The

District Court’s decision therefore chips at the foundations of these First Amendment freedoms.

II. The Government Cannot Demonstrate an Interest in Regulating Genuine Issue Advertisements

by 501(c)(3) Nonprofit Organizations.

BCRA’s mandatory disclosure regime threatens

the rights of these nonprofit organizations, which are

barred by law from engaging in electioneering. While

these organizations do not, and may not, engage in

electoral advocacy, BCRA’s mandatory disclosure provisions unnecessarily sweep in their speech as well

and thereby threaten to chill efforts by these organizations to influence their fellow citizens on matters of

public policy. While the Government likely cannot offer any legitimate interest to regulate issue speech,

regardless of the identity of the speaker, the Government’s justification in this case is even weaker, because the speaker is a 501(c)(3) organization already

banned from engaging in electoral activity by virtue of
14

its tax status, and there is no argument here that the

organization had violated those requirements.

A. The Justification for Mandatory Disclosure

Provisions Do Not Apply to Issue Ads.

BCRA’s definition of “electioneering communications” goes well beyond speech “intended to influence

the voters’ decisions” and likely to “have that effect.”

McConnell, 540 U.S. at 206. BCRA applies to any

“broadcast, cable, or satellite communication” that

“refers to a clearly identified candidate for Federal office” and is made within 60 days of a general election

or 30 days of a primary election. 52 U.S.C.

§ 30104(f)(3)(A)(i)(I)-(II). The advertisement must be

aired before the candidate’s constituency, which in the

case of a Senator running for election, means the advertisement would be “received by 50,000 or more persons” in the relevant state. 52 U.S.C. § 30104(f)(3)(C).

BCRA’s disclosure requirement does not advance

the Government’s “informational interest” in facilitating “individual citizens seeking to make informed

choices in the political marketplace” by disclosing the

names of financial supporters of genuine issue speech.

McConnell, 540 U.S. at 197 (quoting McConnell v.

FEC, 251 F. Supp. 2d 176, 237 (D.D.C. 2003)). By definition, genuine issue speech does not seek to influence political elections, nor could it reasonably be interpreted that way. WRTL II, 551 U.S. at 469-70.

Regulation of such speech, which has nothing to do

with political elections, does not advance the Government’s interest in “providing the electorate with information, deterring actual corruption and avoiding any

appearance thereof, and gathering the data necessary
15

to enforce more substantive electioneering restrictions.” McConnell, 540 U.S. at 196. It cannot

withstand exacting scrutiny, because there is no linkage between the Government’s interest and the effect

of the law on genuine issue speech. Id.

B. There Is Even Less of a Justification for Regulating the Issue Speech of 501(c)(3) Organizations, Which Are Barred from Political Activity.

While the Government cannot justify applying the

BCRA regulations to any genuine issue speech, the

Government’s interest in this case is even weaker, because the Independence Institute is a 501(c)(3) organization. As a condition of its tax-exempt status, the

Independence Institute is pervasively regulated by

the Internal Revenue Service and specifically prohibited from participating in any political activity.

The IRC prohibits 501(c)(3) nonprofits from participating in any political campaigns, directly or indirectly. See 26 C.F.R. § 1.501(c)(3)-1(c)(3)(iii). These

nonprofits agree to forgo their right to engage in political speech and partisan activity in exchange for tax

benefits which allow them to deduct charitable donations from their tax liabilities.3

3 The tax penalties for violations of these rules provide a strong

incentive for compliance and further undermine the FEC’s interest in policing the speech of 501(c)(3) organizations. A 501(c)(3)

organization that is determined by the IRS to be engaged in political activity can be fined an initial ten-percent tax on the

amount of money spent on political speech. 26 U.S.C. §

4955(a)(1). It can then face a penalty of up to one hundred percent if it does not correct the violation during the tax year. 26

U.S.C. § 955(b)(1). Failure to correct a violation and continuing

to engage in political behavior can also subject the nonprofit to
16

Consistent with the Court’s approach in WRTL II,

and in marked contrast with BCRA, the IRS evaluates

whether a nonprofit is participating in electoral activity by considering all of the facts and circumstances

around the organization’s actions. See Revenue Ruling 2007-41 (“Whether an organization is participating or intervening, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office depends upon all of the facts

and circumstances of each case.”).

These factors include two of the factors contained

in BCRA’s definition of “electioneering communication,” notably whether the statement “identifies one

or more candidates for a given public office,” and “is

delivered close in time to the election.” Id. But the

IRS does not take those two facts as dispositive. Id.

Instead it goes on to consider several other factors

that would distinguish between genuine issue speech

and electoral activity, including whether the speech

“expresses approval or disapproval for one or more

candidates’ positions and/or actions,” “makes reference to voting or an election,” involves an issue that

“has been raised as an issue distinguishing candidates

for a given office,” “is part of an ongoing series of communications by the organization on the same issue

that are made independent of the timing of any election,” and whether “the timing of the communication

taxation at the highest corporate rate under 26 U.S.C. § 527(b),

and managers and employees of the nonprofit can be subject to

monetary penalties. Id. § 4955. These strict penalties provide a

strong incentive for 501(c)(3) nonprofit to ensure they do not give

even the appearance of engaging in political behavior, lest they

lose their tax exempt status and pay these significant penalties.

See Branch Ministries, Inc. v. Rossotti, 211 F.3d 137 (D.C. Cir.

2000).
17

and identification of the candidate are related to a

non-electoral event such as a scheduled vote on specific legislation by an officeholder who also happens to

be a candidate for public office.” Id. In marked contrast with the BCRA definition, the IRS emphasizes

that no one of these factors is dispositive, and the context of a broadcast message or other communication

must always be taken into account before evaluating

whether the organization is engaged in political behavior. Id.

IRS Revenue Ruling 2007-41 contains twenty-one

illustrative examples. “Situation 14” is almost identical to the Institute’s proposed advertisement. In Situation 14, a 501(c)(3) university wishes to publish in

large-circulation state newspapers an advertisement

urging members of the public to contact a senator to

vote a certain way in pending legislation. The senator

is also a candidate for election in a primary which will

be held “shortly” after the advertisement would be

published. Although the advertisement mentions the

name of the senator in the context of encouraging

members of the public to call him, it does not say he is

a candidate for office, nor does it mention the upcoming election. Under these facts, the IRS would conclude this advertisement is not an electioneering communication. Id. Yet such a communication would be

regulated under BCRA.

Ironically, the District Court ruled the Independence Institute’s position “is entirely unworkable as a

constitutional rule” because the “Institute itself has

offered no administrable rule or definition that would

distinguish which types of advocacy specifically referencing electoral candidates would fall on which side of
18

the constitutional disclosure line, or how the Commission could neutrally police it.” Independence Inst.,

No. 14-cv-1500, at *15. Yet this Court already recognized the need for a context-based test in WRTL II,

where it affirmed that such a test would be administratively feasible. 551 U.S. at 470. And the IRC regulations demonstrate what such a test might look like

in practice. Rather than imposing a bright-line burden on communications mentioning an incumbent

during an election season, Congress could well have

prescribed standards by which the FEC or courts

could evaluate the facts and circumstances surrounding a communication to determine whether it was genuine issue speech.

The IRS’s definition of election activity is not perfect. The facts and circumstances test can impose significant burdens on 501(c)(3) organizations asked to

show that they have not participated in electoral activity. It can further provide undue discretion to those

charged with administering those rules. Nicholas

Confessore et al., Confusion and Staff Troubles Rife at

I.R.S. Office in Ohio, N.Y. TIMES, May 18, 2013, available at http://www.nytimes.com/2013/05/19/us/politics/at-irs-unprepared-office-seemed-unclear-aboutthe-rules.html. What the standard demonstrates,

however, is that the BCRA definition of “electioneering communication” is overbroad, because it unnecessarily sweeps in speech, such as that at issue in this

case, where no reasonable observer would conclude

said speech was actually intended to, or likely to, influence a pending election.
19

C. BCRA Imposes Substantial Burdens on

501(c)(3) Groups.

BCRA’s mandatory disclosure provision imposes

substantial burdens on speech on multiple levels.

Many donors will lose their voice because they will not

wish to contribute for fear of public disclosure and its

consequences; many charities will have fewer resources with which to support their message. See,

e.g., AFL-CIO v. FEC, 333 F.3d 168, 175 (D.C. Cir.

2003) (“The Supreme Court has long recognized that

compelled disclosure of political affiliations and activities can impose just as substantial a burden on First

Amendment rights as can direct regulation.”).

First, BCRA restricts nonprofits from mentioning

the name of a candidate for federal office, even if that

person is an office holder responsible to his constituency and able to push for legislative change. Spurring

people into action is key to the mission of SPN’s members, and it is significantly harder to do so when the

speaker cannot tell its audience which legislators to

contact and how to do so.

Second, BCRA restricts the timing of issue speech

in the weeks before elections, a period of often intense

legislative activity. For example, on September 29,

2016, Congress approved an appropriations law that

included funding for the Zika virus, victims of catastrophic floods, and military and veterans affairs.

P.L. 114-223. In the run-up to the 2004 presidential

election, the Senate voted on an amendment affecting

the Department of Homeland Security’s no-fly lists. S.

2845, 108th Cong. (2004). Issue groups need to communicate with the public about these issues whenever

legislative issues arise. But BCRA chills this ability
20

to engage in the democratic process and restricts communication during important parts of election years.

Third, because 501(c)(3) organizations do not regularly engage in politics, they are often ill-equipped to

navigate the complexities of campaign finance laws.

These complex regulations require the assistance of

lawyers and other professionals to ensure compliance.

This is burdensome, expensive, and time-consuming.

It imposes an extra layer or regulation above and beyond what they must do under the IRC.

Fourth, BCRA’s disclosure mandate inevitably reduces charitable donations to those organizations that

speak to the public. “Confidentiality is indispensable

to the trust relationship that must exist between a

nonprofit organization and its constituents.” Eugene

R. Tempel, ed., HANK ROSSO’S ACHIEVING EXCELLENCE

IN FUND RAISING 440 (2d ed. 2003). Even the mere

threat of disclosure can make donors think twice.

Dick M. Carpenter II, Disclosure Costs: Unintended

Consequences of Campaign Finance Reform, INST.

FOR JUSTICE, 2007, available at http://www.ij.org/disclosure-costs (empirically documenting the deterrent

effect of mandatory disclosure).

And the consequences of public disclosure can include harassment, threats, vandalism, and outright

violence. See Thomas Kaplan, Nonprofits Are Balking

at Law on Disclosing Political Donors, N.Y. TIMES,

Aug. 20, 2013, available at http://http://www.nytimes.com/2013/08/21/nyregion/citing-safety-nonprofits-balk-at-law-on-disclosing-donors.html; Letter

from Arthur Eisenberg, Legal Director, NYCLU, to

Rob Cohen, N.Y. State Joint Commission on Public

Ethics at 6-7 (Apr. 24, 2014), available at

http://jcope.ny.gov/source_funding/forms/2014-04-24-
21

NYCLU%20appeal.pdf; see also FEC Advisory Op.

2012-38 at 9 (Apr. 25, 2013) (renewing exemption

from disclosure of Socialist Workers Union members

because of workplace violence and harassment

against members of the group), available at

http://saos.fec.gov/aodocs/AO%202012-38.pdf.

Disclosure of donations also reveals associations

with groups, and this has the potential to brand someone with a form of identity. See William McGeveran,

Mrs. McIntyre’s Checkbook: Privacy Costs of Political

Contribution Disclosure, 6 U. PA. J. CONST. L. 1, 19

(2003). Disclosure can expose all manner of interests,

beliefs, passions, and activities. See Seth F. Kreimer,

Article: Sunlight, Secrets, and Scarlet Letters: The

Tension Between Privacy and Disclosure in Constitutional Law, 140 U. PA. L. REV. 1, 11 (1991) (referring

to the “spotlight of public opinion”). And with the advent of the internet, these associations and brandings

may remain permanent for all time. See Daniel J.

Solove, Modern Studies in Privacy Law: Notice, Autonomy and Enforcement of Data Privacy Legislation:

Access and Aggregation: Public Records, Privacy and

the Constitution, 86 MINN. L. REV. 1137, 1178 (2002);

Kreimer, supra at 115 (“Although today I may not care

who knows about my ACLU membership, I may

dearly wish in twenty years that it be confidential.”).

Predictably, many donors will choose to forgo donations rather than have their identities and ideological

sympathies made known.
22

III. The States Have Built Upon BCRA’s Overbroad

Foundations and Thus Imposed Additional Burdens on 501(c)(3) Nonprofits.

The decision below not only extends federal law beyond what can be justified, but it relies upon a rationale that the States have used to justify a morass

of local campaign finance regulations that chill even

more speech. Almost all fifty States have now passed

laws regulating “electioneering communications”

which are generally modeled after the BCRA but in

many cases are more extensive and draconian.

The state electioneering communications laws can

be more extensive than the BCRA in several ways.

Some states expand the time horizon when electioneering communications trigger mandatory disclosure

of donors (the blackout period). For example, in Massachusetts, the window when communications trigger

the disclosure requirements is 90 days before an election. Mass. Gen. Laws ch. 55, § 1. In Alabama, the

time horizon is 120 days before an election. Ala. Code

§ 17-5-2(a)(6).

Another way States have broadened the reach of

disclosure laws is by expanding the media which trigger disclosure. BCRA covers “any broadcast, cable, or

satellite communication.” 52 U.S.C. §

30104(f)(3)(A)(i). But many States include direct

mailings, print media including flyers and newsletters, and telephone and electronic communications.

See, e.g., Fla. Stat. Ann. § 106.011; Ala. Code § 17-5-

2(a)(6). The laws of other States cover newspapers,

magazines, and billboards—making a communication

through one of these media could trigger the disclosure requirements of these states’ laws. See, e.g., Oklahoma Ethics Law § 257:1-1-2; Fla. Stat § 106.011;
23

Idaho Code Ann. § 67-6602(f). Illinois’s law covers the

use of the internet, a step which could affect relatively

innocuous “e-newsletter” attempts to communicate

online with people who sign up for news updates from

a nonprofit organization to keep abreast of its news

and activities. See 10 Ill. Comp. Stat. 5/9-1.14.

These state disclosure laws may also be more severe than their BCRA counterpart in a more fundamental way: they can regulate underlying content of

the communication more extensively than the BCRA.

While the BCRA disclosure requirement is only triggered when a communication clearly identifies a candidate for federal office, some state laws are triggered

when the communication mentions a political party or

even a “clearly identified question of public policy that

will appear on the ballot” within a window of time before an election. See id.

In addition to wide variations in the substance of

electioneering laws among the States, there are many

differences in the reporting and disclosure procedures

and obligations among these laws, adding to the burden of compliance. Compare, e.g., Utah Code Ann. §

20A-11-901 (requiring a report within 24 hours of the

electioneering communication law being triggered

which lists the name and address of relevant donors)

with Fla. Stat. Ann. §§ 106.0703(1)(b) and (3)(a)(1)

(specifying different reporting timeframe and threshold amount).

Few 501(c)(3) nonprofits have the money to pay for

expensive compliance departments and the many lawyers necessary to navigate a sea of competing and inconsistent disclosure laws. The FEC’s Campaign

Guide for Corporations and Labor Organizations is

134 pages and outdated (2007), and many State laws
24

require similarly long exposition. See

http://www.fec.gov/pdf/colagui.pdf. Given that these

laws chill speech of nonprofits, reduce their profiles,

and deter financial contributions, they have even less

money to invest in regulatory compliance.

These disclosure laws will burden most heavily the

nonprofits like Independence Institute and SPN and

the sixty-five independent think tanks within SPN,

whose missions are concerned with educating the public about matters of public policy. These organizations

do not engage in partisan politics or political advocacy, but their messages touch upon legislation and

matters of policy which members of Congress or state

legislators or governors may be involved with. Under

BCRA and these state law electioneering regimes, unless 501(c)(3) nonprofits curtail their communications

during certain times of year, they face substantial risk

of running afoul of these laws and exposing their donors to the serious consequence of public disclosure.

Many nonprofits will conclude this is a risk not worth

taking, and will stay silent instead—compromising

their mission and the richness of public dialogue at

the same time.
25

CONCLUSION

For the foregoing reasons, the judgment of the District Court should be reversed.

Respectfully submitted,

Robert Alt Steven A. Engel

THE BUCKEYE INSTITUTE Counsel of Record

88 East Broad Street, Christopher M. Trueax

Suite 1120 DECHERT LLP

Columbus, Ohio 43215 1900 K Street, NW

(614) 224-4422 Washington, D.C. 20006

Counsel for Amicus Curiae (202) 261-3300

The Buckeye Institute steven.engel@dechert.com

January 9, 2017 Counsel for Amici Curiae
App. 1

APPENDIX A

In addition to the State Policy Network, this amici

curiae brief is submitted on behalf of the following

501(c)(3) groups:

• The Advance Arkansas Institute is a nonprofit research and educational organization committed to advancing public policy

based on free markets, individual liberty,

and limited, transparent government.

• The Alabama Policy Institute is dedicated to

strengthening free enterprise, defending

limited government, and championing

strong families.

• The Buckeye Institute is an independent research and educational institution whose

mission is to advance free-market public

policy in the states.

• The Commonwealth Foundation for Public

Policy Alternatives, Pennsylvania’s freemarket think tank, transforms free-market

ideas into public policies so all Pennsylvanians can flourish.

• Foundation for Government Accountability

frees millions from poverty by advancing

state and federal welfare reforms and other

free market policies.

• The Freedom Foundation is a nonprofit organization based on the West Coast committed to advancing individual liberty, free enterprise, and limited, accountable government. Currently, the Foundation focuses on
App. 2

public sector labor reform through litigation, legislation, education, and community

activation. The Foundation strives to end

forced unionism, enhance the First Amendment rights of workers, and reduce Big Labor’s undue influence over our state and federal governments.

• The Georgia Public Policy Foundation is an

independent think tank that proposes market-oriented approaches to public policy to

improve the lives of Georgians.

• The Goldwater Institute for Public Policy

drives results by working daily in courts,

legislatures and communities to defend and

strengthen the freedom guaranteed to all

Americans in the constitutions of the United

States and all fifty states.

• The Grassroot Institute of Hawaii is an independent, nonprofit research and educational institution devoted to promoting the

principles of individual liberty, free markets, and limited and accountable government throughout the state of Hawaii and

the Pacific Rim.

• Idaho Freedom Foundation, Inc.’s mission

is to hold public servants and government

programs accountable, expose government

waste and cronyism, reduce the Idaho’s dependency on the federal government and inject fairness and predictability into the

state’s tax system

• Kansas Policy Institute is an independent

think tank guided by the constitutional
App. 3

principles of limited government and personal freedom. It specializes in student-focused education and tax and fiscal policy at

the state and local level, empowering citizens, legislators, and other government officials with objective research and creative

ideas to promote a low-tax, pro-growth environment that preserves the ability of governments to provide high quality services.

• The Mackinac Center for Public Policy is a

Michigan based, nonprofit, nonpartisan research and educational institute advancing

policies fostering free markets, limited government, personal responsibility, and respect for private property.

• Maine Heritage Policy Center formulates

and promotes conservative public policies

based on the principles of free enterprise,

limited, constitutional government, individual freedom, and traditional American values.

• Mississippi Center for Public Policy eliminate barriers and create opportunities so

that Mississippians can prosper.

• The Montana Policy Institute (MPI) conducts nonpartisan research and education

efforts in order to advance individual and

economic liberty policies. MPI provides

leadership training, communications support, and research in order to give Montana

citizens and policy-makers the tools necessary to enact sound state policies.
App. 4

• Oklahoma Council of Public Affairs seeks to

promote free enterprise, limited government, and individual initiative.

• The Pioneer Institute, Inc. is an independent, non-partisan, privately funded research

organization. It seeks to improve policy outcomes through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the

ideal of effective, limited and accountable

government.

• The Rhode Island Center for Freedom and

Prosperity is Rhode Island’s leading free-enterprise public policy research and advocacy

organization. The Center is nonprofit, nonpartisan, and is dedicated to providing concerned citizens, the media, and public officials with empirical research data, while

also advancing market-based solutions to

major public policy issues in the state.

• The Rio Grande Foundation is a research institute dedicated to increasing liberty and

prosperity for all of New Mexico’s citizens by

informing New Mexicans of the importance

of individual freedom, limited government,

and economic opportunity.

• The Texas Public Policy Foundation is a

non-profit, non-partisan research organization dedicated to promoting and defending

liberty, personal responsibility, and free enterprise in Texas and the nation through ac-
App. 5

ademically-sound research and outreach. Since its inception in 1989, the Foundation has emphasized the importance of

limited government, free market competition, private property rights, and freedom

from regulation.

• The Virginia Institute for Public Policy is an

independent, nonpartisan, education and

research organization committed to the

goals of individual opportunity and economic growth. Through research, policy recommendations, and symposia, the Institute

works ahead of the political process to lay

the intellectual foundation for a society dedicated to individual liberty, dynamic entrepreneurial capitalism, private property, the

rule of law, and constitutionally limited government.

• The Wisconsin Institute for Law & Liberty

is an organization dedicated to litigation

and policy research advancing the public interest in individual liberty, limited government and a robust civil society.

• The Wyoming Liberty Group was founded in

2008 with the purpose of inviting citizens to

prepare for informed, active and confident

involvement in local and state government.

The Wyoming Liberty Group provides a

venue for understanding public issues in

light of constitutional principles and governmental accountability.

• The Yankee Institute develops and advances policy solutions that promote smart,
App. 6

limited government; fairness for taxpayers;

and an open road to opportunity for all the

people of Connecticut.