[EL] Tea Party Leadership Fund will not be alone

[Fredric Woocher]

I am curious.  Is CCP's argument merely that the State may not obtain unredacted Form 990 list of donors, or that the State may not obtain any of the information included on those forms?  In other words, may the State ask for the same information itself on its own form in order to recognize the entity as a non-profit for California tax purposes?

Fredric D. Woocher
Strumwasser & Woocher LLP
10940 Wilshire Blvd., Ste. 2000
Los Angeles, CA 90024
fwoocher at strumwooch.com<mailto:fwoocher at strumwooch.com>
(310) 576-1233
From: law-election-bounces at department-lists.uci.edu [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of BZall at aol.com
Sent: Thursday, April 17, 2014 2:44 PM
To: hoersting at gmail.com; law-election at uci.edu
Subject: Re: [EL] Tea Party Leadership Fund will not be alone

Just to be clear, the rationale for the sort of compelled government speech and disclosure at issue here is based in anti-consumer protection, not theories about election-related disclosures. That is a different part of the First Amendment doctrine, because there is thought to be an important governmental interest in protecting vulnerable residents from fraud related to fundraising.

The extension of such theories to political activities, as in recent New York legislation, rests on a completely different First Amendment calculation, and recent Supreme Court decisions (such as the much-maligned McCutcheon) reflect only a single governmental interest powerful enough to justify governmental compulsion to speak/disclose: corruption or the appearance of corruption.

The really interesting part of the CCP case is in its application of the preemption doctrines (express, field and conflict) to the state's rationale for requesting the information for anti-fraud purposes. Just as the Supreme Court has moved to limit federal and state actions to limit political speech, it has also limited the ability of states to enact laws that either conflict with federal law or enter into a space that the federal government has fully occupied, leaving no room for state-level regulation. See, e.g., Sprietsma v. Mercury Marine, 537 U.S. 51 (2002)(state common law on liability for propeller guard defects not preempted by rules for watercraft propeller design from the federal agencies). The most recent example familiar to this list is the EAC cases, Arizona and Kobach, where the Supremes said that states could not require more on a federal voter registration form than the federal agency permitted, but could sue the agency to force it to respect constitutional limitations on its own power. But that was only one of a recent spate of Supreme Court cases on preemption, including several involving state immigration-related laws. See, e.g., Chamber of Commerce v. Whiting, No. 09-115, (2011) (Arizona state licensing power not preempted by comprehensive federal scheme to limit verification of aliens' ability to accept employment); Arizona v. U.S., No. 11-182 (2012)(Arizona statutes on unlawful presence largely preempted by comprehensive federal scheme regulating aliens' residence in the U.S.).

The preemption issues in CCP are whether Congress has occupied the field by expressly providing only a single method and highly-restrictive procedure for sharing federal forms with state agencies, or whether the California requirement for an unredacted 990 Schedule B list of donors makes the express Congressional intention to protect taxpayer information impossible to achieve (note this latter point well if you think requiring donor disclosure in the tax context is easy). This is either field preemption or conflict preemption of a fairly-plain vanilla form, and an issue easily handled by most federal courts. This is a recent change in federal law, and the California defense relies on outdated cases handed down before that legal change.

The key question, as always in a preemption case, is what Congress intended, not what the agency did, and there are likely differing views on that, but the lengthy series of restrictions Congress imposed on the sharing of 990 Schedule B lists of donors both on the agency and on states who receive that information from the IRS is a pretty good indication that Congress wants that information protected. The question is whether the judge will see California's requirement as an evasion of those restrictions; California cannot do indirectly what it is not permitted to do directly. And California's sole defense is that it tries to keep that information confidential; that may not be enough.

Barnaby Zall
Of Counsel
Weinberg, Jacobs & Tolani, LLP
10411 Motor City Drive, Suite 500
Bethesda, MD 20817
301-231-6943 (direct dial)
bzall at aol.com<mailto:bzall at aol.com>
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In a message dated 4/17/2014 5:02:23 P.M. Eastern Daylight Time, hoersting at gmail.com<mailto:hoersting at gmail.com> writes:
The Center for Competitive Politics has sued California to protect its donor list -- donations for c3 activities; far beyond elections.

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