Opinion ID: 3065248
Heading Depth: 2
Heading Rank: 2

Heading: PIR and the LASH Litigation

Text: In 1997, in response to a federal district court’s injunction declaring several of the 1996 Act’s restrictions facially unconstitutional insofar as they applied to LSC grantees’ nonfederally funded activities, see Legal Aid Soc’y of Haw. v. Legal Serv. Corp. , 961 F. Supp. 1402, 1422 (D. Haw. 1997) (“LASH I”), LSC promulgated the PIR to clarify the circumstances under which a grantee could affiliate with an organization that engages in restricted activities.2 See 45 C.F.R. § 1610.8. The PIR provides that: (a) A[n] [LSC grant] recipient must have objective integrity and independence from any organization that engages in restricted activities. A recipient will be found to have objective integrity and independence from such an organization if: (1) The other organization is a legally separate entity; (2) The other organization receives no transfer of LSC funds, and LSC funds do not subsidize restricted activities; and (3) The recipient is physically and financially separate from the other organization. Mere bookkeeping separation of LSC funds from other funds is not sufficient. Whether sufficient physical and financial separation exists will be determined on a case-bycase basis and will be based on the totality of the facts. The presence or absence of any one or more 2 The LASH plaintiffs consisted of several LSC grantee organizations, lawyers that worked for those organizations, an organization representing legal aid clients, and two organizations that provided funding to legal aid organizations. LASH I, 961 F. Supp. at 1406-07. LEGAL AID v. LEGAL SERVICES CORP. 15497 factors will not be determinative. Factors relevant to this determination shall include but will not be limited to: (i) The existence of separate personnel; (ii) The existence of separate accounting and timekeeping records; (iii) The degree of separation from facilities in which restricted activities occur, and the extent of such restricted activities; and (iv) The extent to which signs and other forms of identification which distinguish the recipient from the organization are pres- ent. (b) Each recipient’s governing body must certify to [LSC] within 180 days of the effective date of this part that the recipient is in compliance with the requirements of this section. Thereafter, the recipient’s governing body must certify such compliance to [LSC] on an annual basis. Id. LSC drafted the PIR to mirror the program integrity regulations associated with federal grants provided under Title X of the Public Health Service Act; regulations that withstood First Amendment scrutiny in Rust v. Sullivan, 500 U.S. 173 (1991). See Velazquez II, 164 F.3d at 761-62 (citing 62 Fed. Reg. 12101, 12101-04 (1997)). The restrictions at issue in Rust prohibited Title X grantees from providing counseling concerning the use of abortion as a method of family planning, or engaging in any lobbying effort or legal action aimed at encouraging abortion. See Rust, 500 U.S. at 179-80. A grantee’s affiliate could engage in restricted activities, but only if 15498 LEGAL AID v. LEGAL SERVICES CORP. the grantee and affiliate ensured legal, physical, and financial separation. See id. at 180-81. The Rust court rejected the Title X grantees’ (and doctors who worked for those grantees) claim that the restrictions amounted to an unconstitutional condition. To prevail on such a claim, the Court explained, a recipient of a federal subsidy must show that it has been “effectively prohibit[ed] . . . from engaging in [ ] protected conduct outside the scope of the federally funded program.” Id. at 197. Because grantees were free to engage in restricted activities through a legally separate affiliate, the Court determined that they had failed to establish an unconstitutional condition. The Court also concluded that the challenged restrictions did not amount to impermissible viewpoint discrimination, because Congress had “not discriminated on the basis of viewpoint; it [ ] merely chose[ ] to fund one activity to the exclusion of the other.” Id. at 193. After the issuance of the PIR, the LASH I district court dissolved its injunction and entered summary judgment in favor of LSC. Legal Aid Soc’y of Haw. v. Legal Serv. Corp., 981 F. Supp. 1288, 1294, 1301 (D. Haw. 1997). We affirmed the judgment of the district court, concluding that the Restrictions and PIR satisfy the standards set forth in Rust. See LASH III, 145 F.3d at 1024. Because the PIR did not force LSC grantees to “give up prohibited activities,” but rather allowed them to engage in those activities so long as they were carried out through “separate and independent” entities, we concluded that, under Rust, the Restrictions were constitutional on their face. See id. at 1025. We rejected the LASH III plaintiffs’ contention that the practical burdens associated with channeling restricted activities through separate affiliates amounted to an impermissible burden on the exercise of their free speech rights, but left open the possibility that they could challenge LSC’s application of the PIR in a subsequent action. Id. at 1027. LEGAL AID v. LEGAL SERVICES CORP. 15499