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First Amendment and Lobbying

IRS Goes All-In to Squelch First Amendment Rights of Advocacy Groups

By | First Amendment and Lobbying, Shopfloor Legal, Taxation | No Comments

Not satisfied with the level of controversy they generated by the targeting of nonprofit groups based on their political leanings, the IRS has gone all-in with a recent proposal to classify many legislative advocacy and civic activities of non-profit groups as “candidate-related political activity.”  To say that the proposal has gotten a lot of attention would be an understatement: at the close of the public comment period, more than 140,000 individual comments had been filed.  Proponents have cited their interest in ridding the political process of “dark money.”  Opponents, such as the NAM and a myriad of nonprofit groups across the political spectrum, note that the IRS proposal strikes at the very heart of the First Amendment.

The rule moves beyond FEC definitions of political activity and sweeps in such core good government practices as get out the vote (GOTV) drives, distribution of voter guides, and voter registration activities.  It seeks to classify any communication containing the name of a candidate (of course, every member of the House of Representatives and a third of all US Senators are candidates in any even year) as political activity if it takes place within 30 days of a primary or 60 days of a general election.  Even holding events with elected officials within these time windows would be transformed into a political activity if this proposal were adopted.  Communications involving state and local candidates are also swept in.

As drafted, the proposal applies to 501(c)(4) entities—however, the IRS indicates it is considering applying the new rules more broadly, asking for comments on how the changes would affect 501(c)(5), such as labor unions, and 501(c)(6) business organizations, like the NAM.  This is a strong suggestion as to the direction in which the agency is headed.   Regardless, any rule adopted for 501(c)(4) entities pertaining to political activity could be applied by the IRS and tax law practitioners by analogy (if not directly) to other tax-exempt organizations, and thus it hardly matters whether the rule is applied directly.  It will chill legislative advocacy and civic engagement across all types of nonprofit groups.

In short, the proposal is an onerous incursion into the First Amendment rights of associations and goes to the very heart of our ability to effectively represent our members.   The NAM is all-in to fight this misguided proposal.  To access our formal comments, click here.

Keep Politics out of the Federal Contracting Process

By | First Amendment and Lobbying, Regulations | No Comments

Today the National Association of Manufacturers joined 153 other organizations in a letter supporting H.R. 2008, the “Keeping Politics Out of Federal Contracting Act of 2011.”  The legislation would preclude the White House from forcing federal agencies to require entities to disclose their political spending – as well as that of their officers and directors – as a condition of participating in the federal procurement process.

The letter was sent to Chairman Darrell Issa (R-CA) and Ranking Member Elijah Cummings (D-MD) of the House Committee on Oversight and Government Reform, which is scheduled to consider H.R. 2008 tomorrow.

The bill is in response to an April 2011 draft Executive Order that would require disclosures of political contributions by select parties as a condition for bidding on federal contracts. The draft order is an attack on the First Amendment and suffers from severe legal and policy defects that would, if signed, immediately damage the federal contracting process.

From the letter:

The legislation reaffirms the principle, currently embodied in federal procurement laws, that the Executive Branch has an obligation to procure goods and services based on the best value for the American taxpayer, and not on political considerations. It also reaffirms the principle that the Administration cannot enact through executive fiat legislation that Congress has considered and explicitly rejected.

The NAM thanks Rep. Issa for his leadership on this issue and urges members of the Committee on Oversight and Government to approve H.R. 2008.

Erik Glavich is director of legal and regulatory policy, National Association of Manufacturers.

President’s Draft Order Politicizes, Damages Federal Contracting

By | First Amendment and Lobbying | No Comments

The National Association of Manufacturers joined 87 other business groups and trade associations in a letter to President Obama on Monday night, raises numerous objections to a draft executive order that would require disclosures of campaign contributions by select parties involved in federal contracting.

The draft order is an attack on the First Amendment, as the letter states, suffers from severe legal and policy defects that would, if signed, immediately damage the federal contracting process.

From the letter:

The executive order would make every company that tries to contract with the federal government disclose spending that is confidential and used to fund core, First Amendment-protected political speech. Also troubling is the executive order’s reach beyond companies to their individual officers and directors, who would be forced by the executive order to disclose personal political spending undertaken with their own assets. This aspect of the order will both impair individuals’ First Amendment freedoms and interfere with the relationships between companies and their employees.

The political spending covered by the draft executive order is protected by the First Amendment and may not be interfered with absent an important governmental interest. It is quite clear, however, that despite perfunctory language to the contrary, the draft executive order is not motivated by a desire to improve the federal procurement system or any other potentially legitimate governmental interest. Indeed, the federal procurement system already has several built-in safeguards that work quite well to ensure that contract awards are based on the merits of the bid proposal.

Rather than strengthening these existing safeguards, the draft executive order would politicize the procurement process. The proposed order will either encourage covered speakers to refrain from exercising their constitutional speech rights so as to avoid jeopardizing their competitiveness for federal contracts, or it will encourage speakers to alter their political messages in ways perceived to increase their chances of being awarded federal contracts. Either effect is a problem under the First Amendment.

Thanks to the U.S. Chamber’s blog, the Chamber Post, for highlighting the letter.

And here’s a good summary of the issues from Heritage’s Hans von Spakosvky in The Examiner, “DISCLOSE executive order would politicize federal contracting.” Hans is a former member of the Federal Election Commission.

Attacking Speech, an Executive Order on Government Contracting

By | First Amendment and Lobbying, Regulations | One Comment

President Obama could this week issue an executive order to force business  to disclose campaign contributions to qualify for government contractors, an attack on the First Amendment that would politicize federal contracting and inevitably lead to corrupting “pay for play” arrangements. This isn’t transparency, it’s brute politics.

The National Association of Manufacturers last week released a statement from NAM President Jay Timmons on the proposal, “Manufacturers: Presidential Executive Order Will Strip First Amendment Rights.” Timmons said:

President Obama’s plan to inject politics into the federal contracting process through an executive order is bad policy. Further, the matter already has been rejected by Congress.

While the NAM does not engage in political activity or have a political action committee, we are committed to protecting the First Amendment rights of manufacturing companies who participate in the government contracting process. The draft order would give this or any future Administration unchecked authority to discriminate against certain companies based on their past donations or engagement. This move is a sweeping effort to control personal political involvement through coercion.

Congress already rejected the DISCLOSE Act last year, legislation meant to squelch speech by groups disfavored by the Administration. That the President has plans to circumvent the legislative branch of government — circumvent the First Amendment — to restrict speech by a select, disfavored group of Americans is offensive.

Coverage, commentary ….

Kim Strassel, Wall Street Journal, “Obama’s ‘Gangster’ Politics“: Read More

In Sorrell v. IMS, Yes, It’s About Corporate Free Speech

By | Briefly Legal, First Amendment and Lobbying, Health Care | No Comments

The invaluable Lyle Denniston reports at Scotusblog on today’s oral arguments in the U.S. Supreme Court in the case of Sorrell v. IMS Health, Inc. From “Argument recap: Yes, it’s about commercial free speech“:

No more than a few minutes into the Supreme Court’s argument Tuesday on the new information technology of data-mining, it became very clear that the Justices — perhaps more than a simple majority — see this first test case as one about corporate free speech.   That might not turn out to be true in every case of data-mining that comes along, but it would certainly seem so when a legislature blatantly sets out to curb the use of that technology to convey a commercial message, made up of truthful information.

So heavy was the defense of corporate expression in the opening stages of the argument in Sorrell, et al., v. IMS Health, et al. (10-779) that the lawyer for Vermont — the state involved — obviously had to continue her argument under siege.  Only later did it seem that some of the Justices wanted to provide some leeway for states to regulate data-mining that threatened to invade privacy, perhaps by crafting a less far-reaching final decision.

An assistant state attorney general, Bridget C. Asay of Montpelier, Vt., had barely begun when Chief Justice John G. Roberts, Jr., said the Vermont law that restricts the sale and use, for drug-marketing purposes, of data drawn from doctors’ prescription blanks had the purpose of barring drug companies’ sales representatives from seeing doctors to promote their company products.   Asay could only answer that she disagreed, as Justice after Justice — especially Antonin Scalia — asserted that the state was simply trying to intervene in the marketplace for drugs to promote a message that it liked and to block one that it did not like: that is, the sale of brand-name drugs.

Scotusblog’s case pages are at Sorrell v. IMS.

The National Association of Manufacturers joined the Washington Legal Foundation in filing an amicus brief in support of IMS. We cited the NAM’s Manufacturing Law Center summary of the argument in this preview post, and the WLF’s summary is also excellent: Read More

Sorrell v. IMS Health, Inc.: Opposing Content-Based Limits on Speech

By | Briefly Legal, First Amendment and Lobbying, General | One Comment

The U.S. Supreme Court this Tuesday hears oral arguments in Sorrell v. IMS Health Inc. The National Association of Manufacturers has joined the Washington Legal Foundation in filing an amicus brief urging the Court to protect First Amendment rights by striking down a Vermont law that blocks access to critical healthcare information. As the NAM’s Manufacturing Law Center summary states:

Prescription information, without patient names but with prescribing doctor information, is collected by pharmacies and aggregated. The information is ultimately sold to pharmaceutical companies, who in turn use it to target their marketing efforts. While this information is widely used for other purposes, Vermont prohibits its use in marketing prescription drugs. The information publishers and the Pharmaceutical Research and Manufacturers of America (PhRMA) challenged the law as violating their commercial speech rights, because it restricts the right to convey truthful information to others based on its content.

[The amicus brief argues] that courts should not give deference to legislative fact-finding, predictions and judgments relating to speech restrictions that are not content-neutral, but should independently assess those legislative justifications. Where speech restrictions are motivated by legislative hostility to the content of the speech, courts should not automatically defer to the legislature’s rationale. In addition, the legislature’s findings were last-minute additions that were not developed as a result of any fact-finding studies.

We also supported the view that the privacy interests in the prescribing practices of doctors should be balanced with the First Amendment rights of others. Since courts have not given as much weight to business privacy interests, particularly in the closely regulated affairs of doctors, there must be a compelling government interest to justify restrictions on the First Amendment rights of others. We argued that the law was not intended, nor does it, protect the privacy interests of doctors, since it allows a variety of other uses of the data by insurance companies, government employees, drug companies and others.

The brief is here. The Washington Legal Foundation has background material and additional briefs here. The WLF includes its activism on the case as part of its excellent project, Criminalization of Free Enterprise – Business Civil Liberties Program. Earlier this month, the WLF also sponsored a webinar, “Sorrell v. IMS Health: The First Amendment and Health Care Information Comes Before the U.S. Supreme Court.

White House May Try to Limit Speech Through Executive Order

By | First Amendment and Lobbying, General | One Comment

Hans von Spakovsky, a former member of the Federal Elections Commission and now a Heritage scholar, breaks the news that the White House is considering ways to impose provisions of the anti-speech DISCLOSE Act through executive order.

From “LEAKED: Obama Executive Order Intends to Implement Portions of DISCLOSE Act

An impeccable source has provided me with a copy of a draft Executive Order that the White House is apparently circulating for comments from several government agencies. Titled “Disclosure of Political Spending By Government Contractors,” it appears to be an attempt by the Obama administration to implement — by executive fiat — portions of the DISCLOSE Act.

This was the bill introduced last year by Sen. Chuck Schumer and Rep. Chris Van Hollen to overturn the Supreme Court’s decision in Citizens United v. FEC. The bill had onerous requirements that were duplicative of existing law and burdensome to political speech. It never passed Congress because of principled opposition to its unfair, one-side requirements that benefited labor unions at the expense of corporations. Democratic commissioners at the Federal Election Commission then tried to implement portions of the bill in new regulations. Fortunately, those regulations were not adopted because of the united opposition of the Republican commissioners.

As my source says:

It really is amazing — they lost in the Supreme Court, they lost in Congress, they lost at the FEC, so now the president is just going to do it by edict.

Amazing, but typical. The EPA is attempting to impose limits on greenhouse gas emissions despite clear opposition from Congress, the NLRB is busy enacting all sorts of pro-union provisions that could never pass congressional muster, and the President just issued a signing statement on White House “czars” proclaiming his intention of ignoring congressional appropriations. (Hugh Hewitt examines the trend in his latest column, “Liberals’ impatience with democracy, rule of law is growing.”)

The DISCLOSE Act was an ugly attempt to limit political speech based on who was expressing that speech. (Earlier Shopfloor posts.) The legislation failed in Congress last year. For the sake of the First Amendment, it should stay dead.

The Top 10 Lobbying Victories? Let’s Share the Credit

By | Energy, First Amendment and Lobbying, Global Warming | One Comment

Kevin Bogardus at The Hill has one of those fun list-based stories that will soon sweep through end-of-the-year journalism, “The Top 10 lobbying victories of 2010“:

Looking back over 2010, several companies, business associations and public interest groups racked up significant lobbying victories, despite going against the White House and powerful lawmakers in both parties.

1. U.S. Chamber of Commerce, National Association of Manufacturers, National Mining Association

Business groups like the U.S. Chamber of Commerce, the National Association of Manufacturers and the National Mining Association helped inflict a series of body blows to the big cap-and-trade bill that narrowly passed the House in 2009. The lobbying effort against the bill helped thwart one of the Obama administration’s three major legislative priorities, alongside the reforms of healthcare and financial services.

Cap-and-trade sputtered in the Senate amid resistance from Republicans and conservative Democrats. Senate Majority Leader Harry Reid (D-Nev.) did not even bring a scaled-back version from Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) up for a vote. Shortly after the GOP gains in the elections, Obama admitted that cap-and-trade would be off the table for years to come.

Thanks for noticing! Still, let’s remember that trade associations represent members. In the NAM’s case, that’s some 11,000 member manufacturing companies, other business groups and state organizations. It’s these members, speaking by themselves and through the NAM, who raised serious, legitimate and well-documented objections to the disastrous economic impact of cap-and-trade legislation.

And the NAM’s victories and defeats all come from exercising the Constitutional rights guaranteed to the people:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

The Anti-Speech, Anti-Business Implications of Graphic Tobacco Labels

By | First Amendment and Lobbying, General, Global Warming, Media Relations, Regulations | No Comments

USA Today on Friday editorialized in support of warning labels on cigarette packs meant to repulse would-be smokers by showing them images of disease, death and doom. As the headline suggests, “Graphic warnings turn tables on cigarette marketers,” the core argument is that after all the advertising those lousy tobacco companies have done, why, they deserve it.

It’s always troubling to see newspaper opinion pages argue against First Amendment rights. Thankfully, as is its practice, the paper printed a rebuttal directly below its editorial, a piece by Dan Jaffe, executive vice president of government relations for the Association of National Advertisers. From “A massive censorship scheme“:

Unlike all other governmentally mandated ad disclosures, this is not simply a requirement to provide truthful, neutral information to the public. Rather, it is a transparent effort to utilize the cigarette pack and ads to stigmatize the product and as a medium for the government’s anti-tobacco messages.

The Supreme Court has made clear, however, that private companies cannot be coerced to spend or utilize their own money or property to become the government’s ventriloquist dummies, billboards or megaphones.

Despite claims to the contrary, these proposals would create broad precedents for the advertising community. The Supreme Court forcefully holds that all product categories, however controversial, have equal protection under the First Amendment.

Nor is it plausible that these proposals, justified on the powerful convincing impact of visual imagery, will be applied only in the “unique” case of tobacco.

We’re reminded of EPA’s recent labeling scheme, sticking letter grades on vehicles according to their fuel-efficiency. What happens when the public insists on continuing to buy cars that get a B-minus grade or below? Instead of an educational label, which is what the original cigarette labels were, we can imagine exhortations — “You can help save the environment by buying vehicles with higher grades than C” — and then demonizations: “If you buy this car, you are helping to cause rising ocean levels that will drown the people of Nauru and Bangladesh, especially all the children who can’t swim.” And then, the graphic photos.

Reduction ad absurdum and slippery slope arguments, we know. But it’s also history.

Demonizing vs. Democracy: Chamber Wins the Argument

By | First Amendment and Lobbying, General | No Comments

The White House and DNC attacks against the U.S. Chamber of Commerce for daring to criticize the Administration over policy matters have failed miserably. With no evidence at all — just the bugaboo of “foreign money” — they accused the Chamber of wrongdoing, implying criminal violations and then demanding the Chamber prove itself innocent.

Failing to restrict political speech through passage of the unconstitutional DISCLOSE Act, the partisans turned from legislation to intimidation. That decision harmed public discourse and showed the Obama Administration willing to use the Office of the Presidency for personalized, demagogic attacks.

The Chamber has ably defended itself, and all but the most partisan of media outlets have found the political charges to be overheated, at best. The New York Times cut the White House’s ground of under it in the Oct. 8 report, “Topic of Foreign Money in U.S. Races Hits Hustings“:

The issue of the chamber’s funding first gained notice this week when ThinkProgress, a blog affiliated with the Center for American Progress, an influential liberal advocacy group, posted a lengthy piece with the headline “Exclusive: Foreign-Funded ‘U.S.’ Chamber of Commerce Running Partisan Attack Ads.”

The piece detailed the chamber’s overseas memberships, but it provided no evidence that the money generated overseas had been used in United States campaigns. Still, liberal groups like MoveOn.org pounced on the allegations, resulting in protests at the chamber’s offices, a demand for a federal investigation by Senator Al Franken, Democrat of Minnesota, and ultimately the remarks by Mr. Obama himself.

White House officials acknowledged Friday that they had no specific evidence to indicate that the chamber had used money from foreign entities to finance political attack ads.

Bob Schieffer, host of CBS’s “Face the Nation,” in a response to White House official David Axelrod’s accusations: “I guess I would put it this way. If– if– if the only charge, three weeks into the election that the Democrats can make is that there’s somehow this may or may not be foreign money coming into the campaign, is that the best you can do?” Read More