The Supreme Court dealt a blow Thursday to efforts to rein in so-called dark money political groups, issuing a ruling striking down California’s policy of demanding donor lists from nonprofit organizations.
The high court split 6-3 along ideological lines in its decision on a pair of cases challenging that California requirement, which forced non-profits raising money in California to give the state copies of federal tax forms containing donor information.
Chief Justice John Roberts, who wrote the majority opinion for the court, ruled that California’s “blanket demand” for that information “is facially unconstitutional.”
“When it comes to the freedom of association, the protections of the First Amendment are triggered not only by actual restrictions on an individual’s ability to join with others to further shared goals. The risk of a chilling effect on association is enough,” Roberts wrote for the court.
The ruling could have a political impact, complicating donor-disclosure requirements for groups that often pour large sums into elections but stop just short of the “express advocacy” for or against candidates that triggers stricter rules on revealing the sources of donations.
The court ruled that the California mandate for groups to turn over donor information to the state, even if kept confidential, was overly broad.
“The point is that a reasonable assessment of the burdens imposed by disclosure should begin with an understanding of the extent to which the burdens are unnecessary, and that requires narrow tailoring,” Roberts wrote.
Roberts’ ruling did not address the federal government’s authority to require the filing of donor information with the Internal Revenue Service. Most charities are still required to file lists of donors giving over $5,000 in a given year, but in 2018 the IRS dropped the requirement for some politically-oriented groups.
The justices’ ruling Thursday addressed lawsuits filed by two politically active, conservative nonprofit organizations in 2015. The Americans for Prosperity Foundation, backed by political megadonors Charles Koch and the late David Koch, brought one of the suits. The other was filed by the Thomas More Law Center, a Michigan-based legal organization active on behalf of Catholic causes that was bankrolled by Tom Monaghan, founder of Domino’s Pizza.
Both organizations argued that California rules requiring filing of donor lists with state officials violate the First Amendment by discouraging individuals from giving and by exposing them to threats and harassment.
In 2016, AFP persuaded a federal judge in Los Angeles to issue a permanent injunction against the requirement. The judge said the state rarely used the information, but often disclosed it accidentally with charities' public tax filings.
However, two years later, a 9th Circuit Court of Appeals panel unanimously reversed that ruling, holding that the state had a legitimate need for the data and that the Koch-founded group had not shown a significant burden on donors.
It’s unclear how the Supreme Court’s conclusions will impact similar donor-disclosure requirements at the federal level. The Internal Revenue Service has generally done a better job of keeping filings it receives confidential.
Part of Roberts’ opinion does, however, open the door to challenges to other disclosure requirements: “While exacting scrutiny does not require that disclosure regimes be the least restrictive means of achieving their ends, it does require that they be narrowly tailored to the government’s asserted interest,” he wrote.
Justice Sonia Sotomayor, writing in dissent and joined by the two other liberal-leaning justices, did however predict that the decision would open the floodgates to weakening disclosure requirements.
“Today’s analysis marks reporting and disclosure requirements with a bull’s-eye,” she wrote. “Regulated entities who wish to avoid their obligations can do so by vaguely waving toward First Amendment ‘privacy concerns.’”
The high court rulings could have a broader impact on efforts by Democrats to broaden and increase disclosure requirements, particularly for groups that run ads that mention federal candidates while stopping short of explicitly endorsing or opposing them.
The For the People Act, congressional Democrats' massive campaign and ethics reform legislation that is stalled in the Senate amid Democratic infighting and a successful Republican filibuster last week, also contains provisions that would remake campaign finance disclosure law if enacted.
Amid the hundreds of pages of the bill is a long-fought-over proposal that would dramatically expand which organizations are required to disclose donors and expenditures if they spend a nominal amount on communications that broadly mention federal candidates.
Republicans are now broadly opposed to such measures, a turnabout from two decades ago when prominent GOP leaders backed robust disclosure rules as an alternative to attempts to restrict donations to campaigns and outside groups.
“Republicans are in favor of disclosure,” Sen. Mitch McConnell (R-Ky.) said in a 2000 interview. “Why would a little disclosure be better than a lot of disclosure?”
McConnell has said that soon after those comments — and the passage of the Bipartisan Campaign Reform Act despite his opposition in 2002 — he concluded that such rules for groups that don’t engage in express advocacy violate the First Amendment. In the AFP case decided Thursday, he filed an amicus brief saying donor-disclosure requirements should face the “strictest scrutiny” when reviewed in court.
While AFP and the Thomas More Law Center unsurprisingly garnered support for their legal challenges from other conservative organizations, several liberal groups and First Amendment advocates also urged the Supreme Court to rule in favor of donor privacy in the cases.
The NAACP Legal Defense & Educational Fund, the American Civil Liberties Union, the LGBTQ rights advocacy group Human Rights Campaign and others argued that the justices should hold that California’s failure to keep the donor information confidential violated the conservative groups’ rights.
However, the liberal organizations’ brief — which drew significant interest from conservative justices at oral arguments — pushed the court toward a narrow decision that would not upset disclosure requirements for political campaigns or address the rights of regulators with a better track record for confidentiality to gather donor information.
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