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Federal Judge Strikes Down New York Lobbying and Issue Advocacy Donor Disclosure Requirements
Caplin & Drysdale

Federal Judge Strikes Down New York Lobbying and Issue Advocacy Donor Disclosure Requirements

Date: 10/3/2019

On September 30, Judge Denise Cote of the United States District Court for the Southern District of New York ruled unconstitutional two provisions of New York State law that were enacted in 2016 with the strong backing of Governor Andrew Cuomo to require certain 501(c)(3) and 501(c)(4) organizations that fund New York lobbying and engage in issue advocacy to publicly disclosure their donors. The state is reportedly considering an appeal of the ruling to the United States Court of Appeals for the Second Circuit.

Citizens Union filed suit against New York in December 2016, asserting that the donor disclosure requirements unconstitutionally burden First Amendment rights of free speech and association, including the right to anonymously engage in issue advocacy. On December 29, 2016, the New York Attorney General agreed to postpone enforcement of the donor disclosure requirements pending the outcome of the lawsuit, so these two donor disclosure requirements were not yet being enforced and will not be enforced unless the Second Circuit reverses on appeal, although many charitable and social welfare organizations have been closely monitoring the litigation.

The first of the challenged provisions, Section 172-e of the Executive Law, requires 501(c)(3) organizations that make in-kind donations of more than $2,500 to certain 501(c)(4) organizations engaged in New York lobbying to file donor disclosure reports on a semi-annual basis. These reports must, among other things, disclose the identities of donors of more than $2,500 to the 501(c)(3) organization regardless of whether the donor intended or even knew that their donation would be used to provide in-kind support to a 501(c)(4) engaged in New York lobbying. Judge Cote ruled that this broad donor disclosure requirement was not drawn narrowly enough to justify the government’s interests, writing that the requirement was a “poor fit” and that “[t]he link between a 501(c)(3) donor and the content of lobbying communications by the 501(c)(4) is too attenuated to effectively advance any informational interest.”

The second challenged provision, Section 172-f of the Executive Law, requires certain 501(c)(4) organizations to similarly disclose their sources of funding—with a $1,000 donor itemization threshold—if they spend more than $10,000 in a calendar year on “covered communications.” Judge Cote’s ruling focused on the broad definition of “covered communications” in the statute, which encompassed “pure issue advocacy” to the general public during any period of time, rather than just in the lead up to the election of a government official referenced in the communication. In short, Judge Cote ruled that this donor disclosure requirement swept far too broadly to be justified as an effort to provide transparency into the funders of advertisements that are styled as issued advocacy but appear to be an effort to influence candidate elections.

Importantly, this ruling does not directly effect a separate lobbying donor disclosure requirement found in New York Legislative Law, referred to as Source of Funding disclosure, which requires certain lobbyist clients to disclose their donors. This donor disclosure requirement has already been implemented and is being enforced by the New York State Joint Commission on Public Ethics.

Caplin & Drysdale will continue to monitor any changes to the new law. Please contact a member of Caplin & Drysdale's Political Law Group if you have questions concerning this alert or for more information.

Matthew T. Sanderson
 msanderson@capdale.com 
202.862.5046

Trevor Potter
 tpotter@capdale.com 
202.862.5092

Bryson B. Morgan
 bmorgan@capdale.com 
202.862.7836

Olivia N. Marshall
omarshall@capdale.com
202.862.5076

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