Court Calls Ethics Commission’s Bluff in Suit
AUSTIN, TEXAS: On Tuesday, the 3rd Court of Appeals released a ruling in THSC’s lawsuit against the Texas Ethics Commission (TEC), ending THSC’s nearly five-year-long battle with the abusive agency. Although the court seemed to split the proverbial baby, procedurally, it ultimately handed THSC and other Texas nonprofits a win
Texas Ethics Commission Picks a Fight with Every Nonprofit in Texas
In 2014, THSC filed suit against TEC to prevent them from enforcing unconstitutional rules they had adopted to curtail the freedom of political speech by nonprofit corporations like THSC.
The original rules proposed by TEC required that any nonprofit that spent more than 25 percent of its annual budget on election-related work must report to the state as if it were a political action committee (PAC). To calculate this 25-percent threshold, TEC said the nonprofit must factor in everything from staff salaries to the cost of office rent and even the value of volunteer hours.
Here’s the deal:
Under this expansive criterion, THSC’s actual percentage of electionrelated work would have ballooned from 20 percent to nearly 50 percent, subjecting THSC to burdensome regulations and requirements to disclose the names and addresses of THSC members.
That’s not all...
In response, THSC sued TEC, arguing that TEC was acting outside the authority granted by Texas law and was in violation of the First Amendment as well as United States Supreme Court precedent under the Citizens United ruling.
Texas Ethics Commission Found Itself in a Lose-Lose Situation in Lawsuit
The TEC had painted itself into a corner. It could either argue that:
1. The law granted them authority to regulate nonprofits, like THSC, knowing that the courts would rule against them; or, 2. That their new rules did not apply to nonprofit corporations like THSC, thereby freeing THSC and other nonprofits to continue unhindered in their free speech.
What happened next?
Likely to avoid the risk of having to pay THSC’s attorney fees in the event of a loss, TEC chose the second option. At oral arguments before the 3rd Court of Appeals in November of 2017, TEC successfully avoided addressing how they had routinely threatened nonprofits, including THSC, with investigation and regulation. They argued instead that nonprofits like THSC could not be subject to the new rules at all and that the suit should therefore be dismissed.
But there’s a catch:
In a contradiction that only a government agency could rationalize, this argument came after TEC had signed a preliminary injunction agreeing not to enforce regulations so long as THSC’s spending remained below 20 percent of our budget. Why would TEC agree to the injunction if they never believed THSC was subject to regulation?
TEC Lawsuit: Free Speech for Texas Has Cost Us Greatly
On Tuesday, November 6, the 3rd Court of Appeals dismissed the suit, conditioning their decision on TEC’s new position that THSC and similarly situated nonprofits could not be subject to this unconstitutional regulation.
This is a great win for THSC and for other Texas nonprofits who can now engage freely in political speech without fear of TEC regulation.
However, because the suit was dismissed rather than decided on the merits, THSC is unable to recoup half a million dollars in attorneys fees that it cost to force the TEC back inside its constitution-sized box. Freedom is costly.
Why does this matter?
THSC will always fight for freedom for Texas families even when the cost is high. The support of Texas families is what has allowed THSC to continue this fight. THSC is now looking ahead to the legislative session where we will have five team members on the ground full time, watching for threats to Texas families and advancing pro-family legislation.