The Regulatory Creep of Grassroots Lobbying Public Disclosure Regimes 4


Requiring public disclosure of an organization’s grassroots lobbying efforts may not be a new concept, but San Francisco’s recently adopted Proposition C is a reminder of the regulatory creep of lobbying disclosure regimes on nonprofit organizations across the nation. San Francisco is the latest of many jurisdictions demanding public disclosure of grassroots lobbying campaigns, and, despite the protestations of nonprofit organizations, these jurisdictions are routinely demanding disclosure regardless of the speakers’ means, methods, or modi operandi. In its haste to uncover the interests behind astroturf campaigns and to force disclosure on anyone who amplifies their voice with money’s assistance, government instead creates minefields of regulatory traps for the unwary and provides the public with almost uniformly useless information.

Few activities are more American than joining with a group of like-minded individuals and demanding that our elected and appointed officials take certain actions that we believe will improve our lives. This activity is so American that we include it in our Bill of Rights: the First Amendment right to petition the government for a redress of grievances—a powerful subset of which is grassroots lobbying. Perhaps the most famous example of grassroots lobbying is the 1963 civil rights March on Washington. Even the Boston Tea Party was, at its base, a grassroots lobbying effort.

The Constitution forbids the government from prohibiting grassroots lobbying activities. Instead, the government fights a proxy battle against lobbying by demanding extensive public disclosure of such activities—under threat of government prosecution—whenever money is involved. These days, lobbying often requires not just a powerful message and passionate individuals willing to carry that message, but also financial resources. As a general matter, tracking lobbying dollars is a reasonable public policy; it lets the public know when companies like Uber and Google or associations like the Western States Petroleum Association or the Sierra Club spend money on professional or grassroots lobbying. However, problems arise when the government casts such a large regulatory net that it catches most grassroots lobbying activities, and pollutes the public record with meaningless information.

Although distinguishable at the margins, San Francisco’s Proposition C is similar to most regimes in that any organization, including the smallest of nonprofits, must register within a few days of triggering a relatively low spending threshold on grassroots lobbying, pay a few hundred dollars in annual fees, and file regular and detailed public reports. Perhaps most challenging, nonprofits must include the amount they pay employees for planning, preparing, and executing a grassroots lobbying campaign—which adds up quickly—when determining the existence of any public disclosure obligations. Larger nonprofits tend to find regimes like Proposition C to be a nuisance, while the smaller and mid-sized nonprofits often find them to be a burden. Regardless of size, however, all organizations must be aware of the regulatory environment or risk facing the government’s wrath.

Indeed, like all lobby disclosure laws, Proposition C has teeth. Each missed registration and report is a violation, and each violation carries a maximum $5,000 fine (not to mention daily late fees for each report, which quickly add up). The maximum fines are often negotiated down for various mitigating circumstances—ignorance of the law, first-time offender, etc.—but the experience is never pleasant, always time-consuming, and never fails to lead to a monetary fine in the thousands or tens of thousands of dollars.

Surely the impetus for Proposition C was not the activities of bona fide nonprofits. Instead, the real motivation for Proposition C was special interest groups that effectively pay for grassroots lobbying campaigns; for instance, groups that pay individuals to appear at public hearings or to write letters to elected officials. For its part, prior to the November election, San Francisco’s nonprofit community voiced serious misgivings about Proposition C. Notably, Gabriel Metcalf—executive director of the San Francisco Planning and Urban Research Association (“SPUR”)—penned an op-ed in the San Francisco Chronicle on behalf of the nonprofit community warning of the “chilling effect” that Proposition C would have on nonprofits that participate in the “public process.” Mr. Metcalf opined that nonprofits were being unfairly caught up in a law meant for astroturf campaigns, not the activities of bona fide nonprofits. SPUR was joined in opposition to Proposition C by the Council of Community Housing Organizations, the Affordable Housing Alliance, and the San Francisco Labor Council, among several other groups. Despite the nonprofit community’s objections, Proposition C passed with an emphatic 75 percent of the vote, and will apply to nonprofits just the same as special interest groups.

By approving Proposition C, San Francisco added itself to the ever-growing list of cities—from San Diego to New York City to San Jose—and states—from California to New York to Washington—that compel public disclosure of grassroots lobbying activity, complete with implications for nonprofit organizations that interact with or attempt to influence governments at any level. Governments claim they are shedding light on astroturf campaigns and other nefarious governmental influences. Even against the backdrop of such lofty goals, these regimes make conducting grassroots lobbying campaigns all the more challenging for nonprofits, and do so without any real proof that they are necessary or accomplish anything of value.

At a practical level, nonprofits must be ever vigilant and educated about the regulatory regimes in effect in the cities and states in which they operate because the consequences of non-compliance range from annoying to debilitating. Knowledge of the regulatory environment allows groups to avoid the costly regulatory traps inherent in these regimes, and affords associations of like-minded individuals with more freedom to exercise their First Amendment rights free from government intrusion, just like they were meant to do.

With so many choices, it is a challenge to determine what is most frustrating for nonprofits under these regimes: the offensive notion that a nonprofit should be subject to the same laws as astroturf campaigns; the voluminous record-keeping a nonprofit must maintain to ensure compliance with the law; the government forcing nonprofits to publically disclose the purpose of their grassroots lobbying campaigns when most organizations blare exactly that through social media anyways. It’s a toss-up, and for its efforts, the government provides the public with information that is rarely of any value to anyone except the government’s prosecutors. Taken together, this is quintessential regulatory creep.

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