Testimony of David Cole

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Testimony of
David Cole
Professor of Law
Georgetown University Law Center
before the
House Committee on Government Reform and Oversight
Subcommittee on National Economic Growth,
Natural Resources and Regulatory Affairs
concerning
"Stop Taxpayer Funded Political Advocacy" Bill
August 2, 1995

Red Bar

Introduction
What the Political Advocacy Bill Does
An Unconstitutional Condition
Discrimination Against Grantees
Violation of Rights to Anonymity
Conclusion

I. INTRODUCTION

Mr. Chairman, thank you for inviting me to testify on the constitutional issues raised by the proposal to "Stop Taxpayer Funded Political Advocacy" (hereinafter "Political Advocacy bill"), recently approved by the House Appropriations Committee. I am a professor of constitutional law at Georgetown University Law Center. I have written on the subject of conditioning federal funds on speech restrictions.Note 1 In addition, I have litigated several cases raising these issues.Note 2 I have provided legal consultation to Independent Sector on the constitutional issues raised by the Political Advocacy bill.
The Political Advocacy bill is constitutionally flawed in several respects. Its most fundamental flaw is that it restricts the rights of all federal grantees to use their own money to engage in core First Amendment protected activities, including public debate on issues of public concern, communication with elected representatives, and litigation against the government. This condition would limit the political freedoms of every grantee, from a local YMCA that gets federal support for a child care program, to a scientist who applies for NIH funding for a medical trial, to a university professor who receives a fellowship for scholarly research, to a Boys and Girls Club that obtains federal sponsorship for a drug prevention program.
There is nothing wrong with providing that federal grants themselves are not to be used for political advocacy. The government is generally free to define how its own grant money is to be used. But there is already an existing OMB Circular, A-122, that expressly forbids the use of grant monies for political advocacy.
This bill does not seek simply to codify OMB Circular A-122, but to expand restrictions on political advocacy to an unprecedented extent. It does not seek merely to limit what grant recipients do with grant money, or even with matching funds in a federally-funded project. Rather, it seeks to have the government control what grant recipients do with their own money, on their own time, outside of any project funded with federal dollars. As such, it plainly violates well-established principles of constitutional law.
The bill has three fundamental constitutional problems. First, it impermissibly conditions eligibility for federal grants on surrendering the right to engage in a broad range of political speech on one's own time and with one's own resources. Second, it imposes these conditions selectively on individuals and nonprofit entities that obtain federal grants, but permits government contractors, who receive a much larger amount of federal money annually, to engage freely and without limitation in the same political activities. Third, its disclosure requirements, which would require millions of Americans to reveal their political activities to the government and/or federal grantees, violate the First Amendment right to engage in anonymous political speech and association.
I will address these problems in turn, but will first summarize briefly how the bill would work.

II. WHAT THE POLITICAL ADVOCACY BILL DOES

As noted above, under current law federal grantees are forbidden from using federal grants to engage in lobbying. Most federal grants implicitly forbid such activity: for example, an NIH grant to conduct research into hearing aids could not be used for political advocacy, just as it could not be used to study skin cancer. Grants are earmarked for particular ends, and must be used for those ends. Moreover, as noted above, an OMB Circular expressly bars the use of grant money for political advocacy.
One provision in the Political Advocacy bill, 1(a)(1), would essentially codify the existing prohibition on using grant money for political advocacy. The rest of the bill, however, is designed to restrict federal grantees' and others' use of their own non-federal money to engage in "political advocacy." Specifically, recipients of federal grants are barred from spending any more than 5 percent of their own non-federal monies on "political advocacy." 1(a)(3).
The bill also restricts the political freedom of entities not receiving grants. Any person or organization that devotes more than 5 percent of his, her, or its own private expenditures to political advocacy is barred from applying for a federal grant for the next 5 years. 1(a)(2). Thus, anyone who thinks they may apply for a grant sometime in the next five years must drastically curtail their private expenditures on political speech in the meantime.
In addition, federal grantees are barred from purchasing any goods or services from any individual or entity that devotes more than 15 percent of its wholly private expenditures to political advocacy. 1(a)(4). And any disbursement of funds -- including private funds -- by a grantee or a grant applicant to persons or organizations that devote more than 15 percent of their expenditures to political advocacy is itself defined as "political advocacy." 1(c)(1)(D). Thus, the Political Advocacy bill reaches out to restrict not only the private expenditures of all grantees and would-be grantees, but also anyone who does business with a grantee.
The bill defines "political advocacy" extremely broadly. It includes what is commonly understood to constitute lobbying and political contributions, but it also includes speech to the public on issues pending before a legislature or agency, and litigation against the government where the entity is not a defendant, or is not challenging a government decision "directed specifically at the powers, rights, or duties of that grantee or grant applicant." 1(a)(1),(2).
This definition is broader than any current definition of lobbying. First, it is broader because current definitions do not restrict privately funded activities at all, but only limit federally-funded activities. Second, the definition extends beyond current definitions by including attempts to influence administrative agency action, such as rulemaking; attempts to influnce state and local laws; public interest litigation; and any disbursement of funds to someone who engages in more than 15% political advocacy.
The bill imposes new reporting requirements. Every federal grantee that engages in any political advocacy would have to describe that advocacy to the government, and that information would then be made available to the public. 2. In addition, in order to comply with the law federal grantees would be required to monitor the private political advocacy of every employee and every person or entity to whom they disburse funds.
Finally, the bill is selective in its imposition of these unprecedented restrictions. The restrictions apply to all grant recipients, such as hospitals, YMCA's, teachers, schools, scientists, and nonprofit entities, but do not apply to government contractors. 1(c)(4).

III. THE BILL IMPOSES AN UNCONSTITUTIONAL CONDITION ON CITIZENS' EXERCISE OF SPEECH RIGHTS WITH THEIR OWN RESOURCES

The Political Advocacy bill amounts to a classic "unconstitutional condition," because it seeks to restrict what U.S. citizens can do with their own money on their own time. As noted above, it restricts the political freedoms of grant recipients, would-be grant recipients, and those who do business with grant recipients. All of these restrictions are unconstitutional for the same reason: the government may not require persons to forego constitutional freedoms to qualify for a federal benefit. The Political Advocacy bill impermissibly requires private citizens to restrict their private expenditures on political speech in order to qualify for federal grants, or even to do business with a federal grantee.
The "unconstitutional conditions" doctrine holds that government may not condition access to a government benefit on the surrender of a constitutional right. The Supreme Court most recently addressed this doctrine in Rust v. Sullivan, 111 S. Ct. 1759 (1991). The Court's analysis in Rust makes clear beyond a doubt that the Political Advocacy bill, if enacted, would be unconstitutional.
In Rust, the Court upheld a regulation barring federally-funded Title X family planning projects from advocating abortion with project funds. In doing so, however, it expressly distinguished the Title X regulation from laws that restrict what grant recipients can say or do beyond the scope of a federally-funded project, on their own time and with their own resources. The former restriction, limited to a federally funded project, is generally permissible; the latter restriction is unconstitutional.
The Rust Court explained that the unconstitutional conditions doctrine applies where "the government has placed a condition on the recipient of the subsidy rather than on a particular program or service, thus effectively prohibiting the recipient from engaging in the protected conduct outside the scope of the federally funded program." 111 S. Ct. at 1774 (original emphasis). By contrast, the Court found, the Title X regulations "govern the scope of the Title X project's activities, and leave the grantee unfettered in its other activities." Id. (emphasis supplied).
Thus, Rust teaches that while government may generally regulate the use of government funds, it may not regulate what a recipient of such funds does with non-government resources. In FCC v. League of Women Voters, 468 U.S. 364, 402 (1984), for example, the Court struck down a law requiring that public television stations receiving federal funds not editorialize with any of their funds, whether federal or not. See also Perry v. Sindermann, 408 U.S. 593, 597-98 (1972). By contrast, the Court has upheld regulations that regulate only the use of government funds. Rust v. Sullivan, supra; Regan v. Taxation With Representation, 461 U.S. 540, 546 (1983) (no infringement on First Amendment rights where Congress "has simply chosen not to pay for [plaintiff's] lobbying").Note 3
The Political Advocacy bill falls squarely on the unconstitutional side of the line drawn in Rust v. Sullivan. The bill's restrictions on "political advocacy" do not merely "govern the scope of the [federally-funded] project's activity," and they do not "leave the grantee unfettered in its other activities." 111 S. Ct. at 1774. Rather than merely restricting the federally funded program, they place "a condition on the recipient of the subsidy." Id.
Indeed, the Political Advocacy bill would virtually reinstate -- with even broader brush - - the law struck down in FCC v. League of Women Voters. In that case, "a noncommercial education station that receives only 1% of its overall income from [federal] grants" was "barred from using even wholly private funds to finance its editorial activity." 468 U.S. at 400. Under the Political Advocacy bill, a television station "that receives only 1% of its overall income from [federal] grants" would be a federal grantee, and therefore would similarly be "barred from using even wholly private funds to finance" political advocacy. League of Women Voters compels the invalidation of the Political Advocacy bill.Note 4
The Political Advocacy bill imposes a sweeping condition: its prohibition on "political advocacy" extends to virtually any public education, litigation, or lobbying effort designed to affect the outcome of a federal, state, or local government decision. The First Amendment is designed to protect the freedom of the citizenry to speak out on matters of public concern, to use the courts, and to communicate with their elected representatives. Because the bill limits grantees' rights to engage in core First Amendment activities on their own time and with their own resources, it imposes an "unconstitutional condition."
Grantees are not the only persons whose rights would be violated by the Political Advocacy bill. The bill also restricts the use of private money by entities and persons receiving no federal funds whatsoever. It bars anyone who has spent more than five percent of their expenditures on "political advocacy" from eligibility for federal funding for a five-year period. Under this provision, anyone who contemplated applying for a federal grant anytime in the next five years would be barred from devoting any more than five percent of their entirely non- federally-funded expenditures to political advocacy today. For example, if I were even thinking about applying for a Fulbright fellowship at any time in the next five years, I would have to refrain from devoting more than 5% of my private expenditures today to political advocacy. That restriction affects people who are not receiving, and may well never receive, any federal grants. There is no guarantee that I, or any of the thousands of other applicants, will actually get a Fulbright. Yet all of us would have to surrender our constitutional rights even to be eligible to apply.
In addition to grantees and potential grant applicants, the bill also restricts the freedom of all who wish to do business with a federal grantee. It prohibits grant recipients from purchasing any goods or services with grant funds from any individual or entity which has spent more than 15 percent of its expenditures on political advocacy. And it counts any disbursement of funds whatsoever to such an entity as "political advocacy," so that grantees and grant applicants would also be restricted in their ability to contract with such entities even with their private monies. In this way, the bill extends its restrictions on speech even to persons who have never and will never apply for a federal grant. An artist, author, or physician who devotes more than 15 percent of his expenditures to "political advocacy," for example, could not be hired by a federal grant recipient to do work on a federally-funded medical pamphlet. And even if such a person were hired by the grantee with non-grant funds, that hire would count toward the 5% ceiling on the grantee's privately-funded "political advocacy."
To enforce such a provision, grantees would have to inquire into the political practices of every employee and independent contractor with whom they do business, raising separate constitutional concerns discussed in Section V of my testimony, infra. And anyone who seeks to do business with federal grantees or even federal grant applicants would for all practical purposes have to restrict their political speech expenditures.
Some have suggested that these restrictions are little different from those that already govern 501(c)(3) nonprofit organizations, which are not permitted to engage in substantial lobbying. The differences, however, could not be more stark. The Supreme Court upheld the 501(c)(3) restriction on lobbying only because under a parallel provision of the tax code, 501(c)(4), nonprofits can set up sister organizations that are unrestricted in their lobbying. Regan, 461 U.S. at 544 and n.6. The only requirement is that the 501(c)(3)'s tax-deductible contributions are not used to subsidize lobbying of the 501(c)(4) affiliate. As a result of this scheme, the 501(c)(3) limitation does not impermissibly restrict organizations' freedom to lobby with private monies; rather, "Congress has merely refused to pay for the lobbying out of public moneys." 461 U.S. at 545.
By contrast, the whole thrust of the Political Advocacy bill is to restrict grantees from engaging in political advocacy with their own money. If the bill sought only to limit federal funding of political advocacy, it would stop after 1(a)(1), which provides that "No grantee may use funds from any grant to engage in political advocacy." The rest of the bill, however, is directly addressed to restricting use of grantees' non-government monies, and therefore cannot be analogized to the regulatory scheme upheld in Regan, which was upheld precisely because it left grantees free to spend their non-government monies in any way they deemed fit.
Timothy Flanigan suggested in his letter defending the Political Advocacy bill that "the proposal in no way limits a grantee from creating a wholly separate and distinct entity that independently raises private funds without the grantee's assistance and that spends such funds on political advocacy without the grantee's involvement." This suggestion, namely that entity separation would save the bill from constitutional invalidation, fails for several reasons.
First, entity separation would defeat the purpose of the bill, which is to limit grantees' and potential grant applicants' freedom to spend their own non-federal money on political advocacy. Everything beyond 1(a)(1) would make little sense if entity separation were an option. For example, 1(a)(2) bars all persons and organizations who have devoted more than five percent of their annual expenditures to political advocacy from applying for a federal grant for five years. If organizations and individuals could avoid that restriction by creating a separate entity and applying through that entity for the grant, the prohibition would be meaningless. The Political Advocacy bill does not permit entity separation on its face, as did the nonprofit tax code reviewed in Regan, and given the statute's evident purpose in restricting private expenditures, a court could not in good faith read such a provision into the statute.
Second, entity separation is simply not an option for many if not most federal grantees. Many federal grantees are individuals -- scholars, scientists, doctors, artists, etc. A violinist who receives an NEA grant cannot divide herself into separate entities.
Third, even if entity separation were an option, the bill's provisions would make it unduly burdensome, by making it all but impossible for a separate entity to be housed in the same location as the grantee, or to share any services with it. In Regan, the Supreme Court held that entity separation served the precise purpose of limiting the law's effect to a refusal to subsidize lobbying, without restricting the recipient's freedom to lobby through its 501(c)(4) affiliate. Justice Blackmun, in his concurrence, stated explicitly that if separation requirements mandated anything more onerous than arms-length dealing in order to guard against subsidization of lobbying, they would be unconstitutional. 461 U.S. at 553-54 (Blackmun, J., concurring).
The restrictions the Political Advocacy bill imposes on grantees' financial dealings with others would make separation highly burdensome, and indeed impossible even for those entities that could conceivably create a separate grant-receiving entity.
Imagine a community youth organization -- call it CYO -- that receives a federal grant for a drug education program, but seeks to spend 20% of its annual private-money expenditures on political advocacy concerning legislative measures to increase safety in the schools and to increase criminal penalties for drug trafficking to minors. In order to avoid the bill's restrictions on the organization's freedom to use its own money for such political advocacy, the CYO would have to create a separate grant-receiving entity -- call it the CYO-Federal Grantee. That entity would not only have to have separate books, but it could not purchase any goods or services with federal funds from the CYO itself. Thus, it could not share a photocopying machine or a phone line with the CYO by reimbursing the CYO for photocopying or phone services. It could not lease space from the CYO. In short, for all practical purposes it would have to be a separately housed entity altogether. And if that entity raised non-federal funds, it would be barred from disbursing any more than 5% of those funds to the CYO for any purpose.
Accordingly, entity separation cannot save the Political Advocacy bill from its "unconstitutional condition" infirmity. Moreover, were the bill amended to permit entity separation with no restrictions other than separate books, the bill would not materially alter the current status quo, under which federal grantees may not use federal grants for political advocacy, but are entirely free to use funds outside the federally-funded project for such advocacy. All it would do is add a layer of unnecessary and wasteful bureaucracy to federal grant-giving.
Most fundamentally, entity separation would defeat the very purpose of the Political Advocacy bill, which is plainly to restrict the way that grant recipients use their non-federal funds for political speech. That is the core purpose of the bill, and it is that purpose which makes the bill an "unconstitutional condition."
IV. THE BILL DISCRIMINATES AGAINST GRANTEES WHILE PERMITTING GOVERNMENT CONTRACTORS UNLIMITED FREEDOM TO ENGAGE IN POLITICAL ADVOCACY
The Political Advocacy bill restricts the "political advocacy" of all government grantees, but does not restrict the "political advocacy" of government contractors. Corporate government contractors remain free to spend unlimited amounts of their own money on political advocacy. Thus, McDonnell-Douglas is free to engage in unrestricted political advocacy with its own funds, notwithstanding substantial government contracts, but a professor who devotes more than five percent of her expenditures to public advocacy in support of the Contract With America would be ineligible to receive a Fulbright scholarship for the next five years.
By treating grantees and contractors differently with respect to their freedom to engage in First Amendment protected activity, the bill is subject to strict scrutiny under the Equal Protection Clause as well as the First Amendment. Where government treats citizens differently with respect to the exercise of fundamental rights, such as speech, the differential treatment is unconstitutional unless necessary to further a compelling state interest. Police Dept. of Chicago v. Mosley, 408 U.S. 92, 96 (1972); Carey v. Brown, 447 U.S. 455, 459-63 (1980). In Mosley, for example, the Court struck down a government ordinance that selectively permitted labor unions to picket outside a school, but barred all other public demonstrations. The City could have barred all demonstrations around the school, but violated the Equal Protection Clause by restricting some groups' speech while tolerating others.
The distinction between contractors and grantees drawn by the Political Advocacy bill does not satisfy strict scrutiny. If anything, government contractors do at least as much if not more lobbying and political advocacy than federal grantees. Last year alone, defense contractors' political action committees contributed $4.2 million to House members, $1.2 million of which went to members of the House National Security Committee.Note 5 Defense contractors "'use lots of lobbying strategies, ranging from mobilizing subcontractors to meet with members, grass-roots lobbying and advertising.'" .Note 6
Defense contractors routinely take out expensive advertisements in the Washington Post, New York Times, or on television when defense appropriations bills are about to be considered. For example, a defense appropriations bill is scheduled for consideration in the House this week, with the fate of the B2 bomber at stake. Last week, Northrop Grumman, which makes the B2 bomber, hand-delivered letters to members on the Hill advocating support for B2 bombers, and for two weeks it has run a series of large advertisements in the Washington Post to the same effect.Note 7 All of this activity would indisputably count as "political advocacy" under the bill if engaged in by a grantee, yet government contractors would remain free to spend as much money as they choose on such efforts.
There is not even a rational basis for the bill's differential treatment of grantees and contractors, much less the compelling interest required to justify differentials in treatment of speech. Moreover, courts would likely subject the distinction to particularly rigorous scrutiny, out of concern that it was motivated by political favoritism toward government contractors, who are major contributors to Congressional campaign coffers.Note 8

V. THE DISCLOSURE REQUIREMENTS VIOLATE THE FIRST AMENDMENT RIGHT TO ENGAGE IN ANONYMOUS SPEECH AND ASSOCIATION

Finally, the bill would require recipients of federal grants to report to the federal government on all of their privately-funded "political advocacy," and would require all who do business with a grantee to divulge their political activities to the grantee. Information reported by the grantee to the federal government would then be made available to the public. Thus, every doctor, artist, researcher, university, and non-profit organization that receives a federal grant would be required to disclose his, her, or its political advocacy to the government and to the public. This requirement would plainly chill First Amendment protected activity, and violates the Supreme Court's decision this term guaranteeing the right to engage in anonymous political speech. McIntyre v. Ohio Elections Commission, 63 U.S.L.W. 4279 (U.S. Apr. 19, 1995). .Note 9

Because "political advocacy" is defined to include traditional associational freedoms, such as contributing to a group, or communicating with members of a group, the requirement that all "political advocacy" be disclosed would also infringe on First Amendment associational rights. The Supreme Court has held that individuals have a First Amendment right not to disclose their political associations. In NAACP v. Alabama, 357 U.S. 449, 462 (1958), the Court recognized that "inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association," and "compelled disclosure of affiliation with groups engaged in advocacy may constitute [an] effective ... restraint on association." Accordingly, "state action which may have the effect of curtailing the freedom to associate is subject to the closest scrutiny." 357 U.S. at 460-61.

The freedoms recognized as essential in NAACP v. Alabama would be directly infringed by the Political Advocacy bill. Grantees would be required to divulge their every disbursement of funds to organizations or persons who devote more than 15% of their expenditures on political advocacy. That information would then be available to any member of the public, and to the government. This would have a particularly chilling effect on organizations advocating unpopular or controversial causes, as the Court recognized in NAACP v. Alabama. 357 U.S. at 460.

To make this more concrete, consider what the bill would require of my employer, Georgetown University. Like virtually every institution of higher education in the country, Georgetown receives federal funds to support research and educational programs. As a federal grantee, Georgetown would have to describe to the government all the privately-funded political advocacy in which it engaged.

In addition, Georgetown would have to monitor the private political activity of all persons to whom it disburses any money, including all faculty, staff, and students. Where a contract is funded by federal dollars, Georgetown would be barred from contracting with anyone who spent more than 15% of his or her private expenditures on political advocacy. And even where no federal dollars are involved, as is true of the bulk of Georgetown's financial transactions, any disbursement by Georgetown to an individual or entity that devotes more than 15% of their private expenditures to political advocacy would have to be counted as "political advocacy" by Georgetown, and reported to the government.

Multiply this kind of monitoring and reporting on private political advocacy by the thousands of institutions and individuals who receive federal grants, and it becomes clear that the Political Advocacy bill will result in unprecedented monitoring of privately-funded political advocacy, violating the letter and spirit of the right to anonymous speech and association.

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VI. CONCLUSION

In the name of stopping "Taxpayer Funded Political Advocacy," this bill would infringe on the basic First Amendment freedoms of thousands of individuals, universities, hospitals, and associations to engage in basic political speech. Our system is government is predicated on a wide-open and vigorous public debate about legislative and agency action. The bill acts as if there is something wrong with political advocacy. There is not; indeed, without it, it is not clear how a representative government would function. It is of course appropriate to ensure that federal grants be used for the purposes to which they are dedicated, but this bill is not necessary to do that. It is both inappropriate and unconstitutional to use the carrot of a federal grant to impose widespread restrictions on the freedom of citizens to engage in political speech with their own resources, and on their own time.

Notes

Note 1 David Cole, Beyond Unconstitutional Conditions: Charting Spheres of Neutrality in Government-Funded Speech, 67 N.Y.U. L. Rev. 675 (1992).