Wednesday, September 18, 2013

Limit on Speech-Related Use of Bingo Proceeds by Charities Constitutional (Fifth Circuit)

In Department of Texas v. Texas Lottery Commission, a panel of the U.S. Court of Appeals for the Fifth Circuit confirmed its earlier decision that upheld as constitutional a Texas statute allowing charitable organizations to raise money by holding bingo games but conditioned on the money so raised only be used for the organizations' charitable purpose and not for certain types of political advocacy, including lobbying.  While the result is perhaps not surprising, the decision is interesting in a couple of respects.

First, in rejecting a standing argument by the defendants, the court concluded that political advocacy such as lobbying is not inherently inconsistent with serving a charitable purpose.  While it noted that federal tax law limits the amount of political advocacy by some nonprofit organizations, it did not find that those limits supported the argument such advocacy was inherently inconsistent with federal tax exemption.  This is definitely the right conclusion, but it is a relief to see the court clearly state this is the case in the face of the defendants' argument to the contrary.

Second, the decision required the court to discuss the application of the unconstitutional conditions doctrine to a speech-related restriction on nonprofit organizations in the wake of Citizens United.  There has been some speculation that Citizens United may have undermined earlier decisions finding such restrictions to be constitutional if tied to a government subsidy, although most commentators have rejected such views.  See, e.g., Paul Weitzel, Protecting Speech from the Heart: How Citizens United Strikes Down Political Speech Restrictions on Churches and Charities, 16 Texas Review of Law & Politics 155 (2011).  The court flatly rejected this argument, concluding that Regan v. Taxation with Representation and Rust v. Sullivan remain good law and distinguishing Citizens United on the grounds that (1) Citizens United did not involve a government subsidy to which the speech restriction at issue was tied and (2) Citizens United involved an outright ban on a specific type of political speech as opposed to a limit on using certain (government subsidized) funds for such speech.

Third and finally, unlike the panel's original decision the new, substituted decision drew a dissent.  Chief Judge Carl Stewart concluded that the speech restriction was in fact an unconstitutional condition.  His point of disagreement was that in his view permitting charities to raise money by holding bingo games did not constitute a "subsidy" in that no funds from the public fisc went to the charities who held such games.  Absent a subsidy, he concluded that TWR and Rust were not applicable and so, under Citizens United, the Commission had the burden of identifying a sufficiently compelling reason for the speech restriction, which it failed to do.

Lloyd Mayer

http://lawprofessors.typepad.com/nonprofit/2013/09/limit-on-speech-related-use-of-bingo-proceeds-by-charities-constitutional-fifth-circuit.html

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