2d Cir: Speech Requirement in Spending Clause Statute Violates 1st Am.

The Second Circuit struck down as violating the First Amendment a provision in a Spending Clause statute requiring organizations to have a policy expressly opposing prostitution.  Applying heightened scrutiny, the court held that the requirement in the Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003 impermissibly “compels grantees to espouse the government’s position on a controversial issue.” Alliance for Open Society International v. United States Agency for International Development, 2011 WL 2623447, No. 08–4917–CV (2nd Cir. July 6, 2011). Judge Barrington Parker (Bush) delivered the opinion of the court joined by Rosemary Pooler (Clinton). Judge Chester Straub (Clinton) dissented.

In 2003, Congress passed the Act to combat HIV/AIDS, tuberculosis and malaria establishing “public-private” partnerships between the federal government and non-governmental organizations (NGOs).  Congress conditioned receipt of federal funds upon the adoption of a policy statement that explicitly opposes prostitution.  The plaintiffs, U.S.-based NGOs dedicated to the fight against HIV/AIDS, engage, educate, and assist groups, including prostitutes, who are at an increased risk of HIV/AIDS.  In order to remain eligible for Leadership Act funds, several of the plaintiffs changed their policy statements and curtailed activities they believed might be inconsistent with the government’s policy statement requirements.  The plaintiffs filed suit, alleging that conditioning Leadership Act funding on the affirmative adoption of a policy opposing prostitution violated their First Amendment rights by compelling grantees to adopt and espouse the government’s viewpoint on prostitution and by restricting grantees from engaging in privately funded expression that might be deemed insufficiently opposed to prostitution.

The district court held that the policy requirement violated the First Amendment because it was not narrowly tailored, imposed a viewpoint-based restriction on the use of private funds without allowing for adequate alternative channels of communication, and “compel[led] speech by affirmatively requiring [plaintiffs] to adopt a policy espousing the government’s preferred message.” Alliance for Open Soc’y Int’l, Inc. v. U.S. Agency for Int’l Dev., 430 F.Supp.2d 222, 268-76 (S.D.N.Y.2006).  The plaintiffs showed a likelihood of success on the merits and irreparable harm, leading the court to enjoin USAID from enforcing the Policy Statement requirement.

While the first appeal was pending, USAID issued guidelines that would allow organizations to retain funding by establishing or working with affiliates that were not bound by the policy requirements.  The affiliates had to fulfill certain requirements, including remaining legally, physically, and economically separate from the organization receiving Leadership Act funds.  On appeal, the district court allowed two more organizations dedicated to international human rights to join, and refused to dismantle the preliminary injunction, because the clause compelling the plaintiffs to espouse the government’s viewpoint remained intact.

The Second Circuit found that the plaintiffs added at the first appeal had standing to sue, despite each being an alliance of other organizations.  The alliances demonstrated that: (a) at least one of its members had standing to sue of its own right; (b) the interests the association seeks to protect are germane to its purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 342–43 (1977).  The court held that the plaintiffs had shown actual and imminent harm because multiple organizations from the alliances adopted policy statements which they otherwise would not have adopted and had been restricted from engaging in privately funded activities vital to their organizations.

Arguing for dismissal of the injunction, USAID contended that there was no constitutional violation because the Act is a Spending Clause enactment, and the plaintiffs could have turned down the money if it did not wish to comply with its conditions.  The court rejected this argument, distinguishing several Supreme Court cases concerning the Spending Clause and First Amendment rights.  Unlike the funding conditions of previous cases, here Congress attempted to compel non-government groups to affirmatively espouse the government’s position.  Moreover, the instant case merits heightened scrutiny because Congress instituted a speech-targeted restriction that is both affirmative and quintessentially view-point based.  The court stated: “Compelling speech as a condition of receiving a government benefit cannot be squared with the First Amendment.”

In Rust v. Sullivan, 500 U.S. 173 (1991), the Court held that view-point based speech restriction may be upheld when the government uses private speakers to transmit the message of its own programs. In Rust, the plaintiffs challenged HHS regulations that allowed grantees to engage in abortion-related services, as long as they did not use Title X funds to encourage promote or advocate abortion. The Second Circuit declined to apply Rust to the present case because Congress did not enact the Leadership Act to express its own viewpoints. The stated purpose of the Leadership Act was to fight HIV/AIDS, not to oppose prostitution. Further, the Act exempts foreign organizations, from the policy requirement, indicating that prostitution was not central to the Act’s purpose. Reiterating that the Guidelines are not sufficient to overcome compelled-speech problems because an affirmative pledge to the government’s view remains, the court upheld the district court’s grant of preliminary injunction.

Judge Straub dissented on the grounds that the policy requirement was a rational exercise of Congress’ Spending Power. Since the Act was enacted through the Spending Power, the policy requirement was a condition upon the receipt of federal funds, rather than a direct restriction on speech.  Accordingly, Straub argues that the facts should have been analyzed under the “unconstitutional condition” doctrine, which requires: the restriction of a recipient’s speech outside of the scope of the recipient’s participation in the government program; or a denial of government benefits to which the recipient would otherwise be entitled. Congress’ record states that opposition to prostitution was vital to its fight against HIV/AIDS and, as a voluntary program, the requirement did not deny any benefits that the plaintiffs were entitled to.  Moreover, Straub rejected the court’s emphasis that an affirmative speech condition is different from a negative speech condition as irrelevant to a subsidy condition question or a restricted speech question.

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