The government had argued that shared facilities and staff create public confusion about what is LSC funded activity and what is not. The court said the government's concerns can be met by having legally separate programs with strict accounting for shared facilities and staff to ensure LSC funds are not spent on restricted activities, and having separate public areas for LSC and privately funded activities. The plaintiffs are represented by the Brennan Center for Justice.
David Udell, director of the Brennan Center, said, "Congress needs to apply the same rules to legal services that apply to other nonprofits, including faith-based nonprofits. More than 40 members of Congress have spoken out against the legal services private money restriction, and now a court has declared the rule unconstitutional. Instead of continuing to defend this unconstitutional restriction, Congress should simply get rid of it." The Center has not yet announced whether it will appeal the portion of the court's ruling upholding the restrictions on LSC funded activities.
The suit follows the 2001 Supreme Court ruling in Velazquez v. Legal Service Corporation, which invalidated a restriction barring legal aid lawyers from challenging welfare reform laws. The case was filed in December 2001 by four legal service programs in New York City, a private charity and pro bono attorney. They challenged the constitutionality of restrictions prohibiting LSC grantees from using LSC or private funds for class action litigation, legislative advocacy and community education. This includes the Òprogram integrity regulation,Ó which requires physical separation between LSC-funded recipients and any organizations that engage in these restricted activities. (Se 45 C.F.R. 1610.) The suit also challenged the bar prohibiting programs from collecting attorneys fees in successful cases.
The restrictions were imposed by Congress in 1996, after the Legal Services Program had been threatened with elimination. They are renewed annually through the appropriations process. During this same time the nonprofit community successfully stopped Rep. Ernest IstookÕs (R-OK) efforts to impose similar advocacy restrictions on all nonprofits that receive federal funding. But, as John Edie, former General Counsel to the Council on Foundations said in a Foundation News and Commentary article, "At first glance, this case appears to affect only funding that helps provide legal services to the poor. But, in fact, the implications are much wider. The ultimate disposition of the Dobbins case could make clear to Congress that, in the absence of a compelling reason, it cannot place limits on private donations to organizations that also receive some federal funding, particularly when the private donations are funding speech."