06/08/2010 05:12 am ET Updated May 25, 2011

Citizens United Ruling Will Liberate Dot-Org News Sites From IRS Rules Curbing Advocacy

By Peter Scheer

Forty-six years ago, the Supreme Court announced its decision in New York Times v. Sullivan, rewriting centuries of "common law" on libel and defamation, in order to boost constitutional protection for criticism of government policies and government officials. One of the most important free speech decisions in Supreme Court history, New York Times was heralded by constitutional lawyers and First Amendment advocates as an occasion for "dancing in the streets."

Fast forward to January 21 of this year: The Supreme Court released its decision in Citizens United v. Federal Election Commission, striking down campaign finance rules restricting independent political advocacy by corporations (and, by implication, unions too). The Court's 5-4 decision, grounded squarely on the First Amendment, overturned two of the Court's own decisions, and sharply narrowed the constitutionally permissible scope of laws (both federal and state) designed to curb the influence of money in politics.

Among constitutional lawyers and free speech advocates, the much-awaited Citizens United decision has caused great consternation-instead of dancing in the streets, a wringing of hands and gnashing of teeth. But the legal intelligentsia are mistaken. Although misgivings about the Court's unleashing of corporate spending in elections are understandable, Citizens United may be the most consequential First Amendment decision -- in terms of expanding free speech rights -- since New York Times v. Sullivan.

Citizens United elevates the status of political speech-expression about public issues, candidates, and the political process-to a place that is first among equals in First Amendment jurisprudence. The new decision places a huge, nearly insurmountable, constitutional barrier in the way of laws restricting speech, particularly political speech, on the basis of the legal status of the speaker.

To appreciate the impact of Citizens United, consider, as one example, the decision's implications for nonprofit organizations. Nonprofit charitable and educational organizations (so-called section 501(C)(3) nonprofits, because they are exempt from tax under that provision of the federal tax code) are subject to onerous limitations on their political expression and activities. Under the tax laws, nonprofits are forbidden to endorse or oppose a political candidate. Violation of this rule can result in the loss of exempt status-a death sentence for most nonprofits.

Other kinds of political expression--from speeches and articles endorsing legislation, to general advocacy on political issues of the day--are subject to varying degrees of restriction. Because of unclear and shifting standards, politically active nonprofit organizations, whether on the left or right, must practice self-censorship: Avoiding many controversial issues altogether because of uncertainty about what the IRS' censorship code (my term, not the agency's) actually proscribes.

Worse, this censorship code today enforces an editorial timidity in the news media. Not the legacy media, nearly all of which are for-profit (or try to be), but among the increasingly important "dot-org" news outlets launched in the last two years and organized as section 501(C)(3) nonprofits: Pro Publica, Texas Tribune, Voice of San Diego, MinnPost, Chicago News Cooperative, Bay Area News Project, and California Watch, among others. Despite their considerable and growing journalistic clout, these news media have been editorially neutered by government content controls--including the prohibition on candidate endorsements--that would make the Founding Fathers roll over in their graves.

Although restrictions on nonprofits' political advocacy have been upheld by courts, Citizens United supersedes those decisions. After Citizens United, only the most compelling justifications can overcome the First Amendment 's presumption against restrictions on political speech predicated on a speaker's legal status. The justifications for the IRS rules don't come close.

The subsidy created by tax-exempt status--the primary consideration in earlier cases--is plainly an insufficient justification in an economy where, for better or worse, most industries enjoy direct or indirect government subsidies. In the media industry, for example, traditional newspapers are subsidized through sales tax exemptions and restrictions on competition for legal notices; television and radio are subsidized through the federal government's decision to give away scarce spectrum space; the internet is subsidized by limitations on taxation of online commerce. Yet no one would suggest for a minute that these subsidies would justify government-imposed restrictions on political advocacy.

Restrictions on nonprofits' political advocacy are popular with Congress. Why? Because members fear that most nonprofits, if freed to advocate for candidates and legislation, would tend to support challengers over incumbents (and legislative "reform" over the status quo). From a First Amendment standpoint, however, this is a reason to strike down restrictions on nonprofits' political advocacy, not to maintain them. Congressional self-preservation is hardly a constitutionally acceptable justification for censorship.

The Citizens United decision is a First Amendment game-changer. The decision's hostility to restrictions on political advocacy may have regrettable effects in the campaign finance arena (although I'm inclined to think that such concerns are overblown). Nonetheless, outside that context, Citizens United has the potential to advance First Amendment protections as significantly as the Supreme Court's New York Times decision nearly a half-century ago.

A test case to invalidate IRS restrictions on nonprofits' political advocacy could be the first demonstration of the power and promise of the Supreme Court's Citizens United decision.
Peter Scheer, a lawyer and journalist, is executive director of the First Amendment Coalition.