94-7478



United States Court of Appeals

for the

Second Circuit

NATIONAL AWARENESS FOUNDATION;

CHILD PROTECTION PROGRAM FOUNDATION; LEE DEYOUNG;

SHAUNNAH HAMMONDS; JACQUELYN L. ESCOBAN;

ANTHONY D. GRADY; RHONDA LEE MORALES,

Plaintiffs-Appellants.

against

ROBERT ABRAMS, Attorney General of the State of New York;

GAIL S. SHAFFER, Secretary of State of the State of New York,

Defendants-Appellees.

_________________________

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF NEW YORK

BRIEF OF FREE SPEECH COALITION, INC. AS AMICUS CURIAE

IN SUPPORT OF PLAINTIFFS-APPELLANTS.

________________

NICHOLAS GILMAN
Gilman, Pangia & Balsamo
1815 H Street, N.W., #600
Washington, D.C. 20006
(202) 466-5100

*Counsel of Record
WILLIAM J. OLSON
JOHN S. MILES
William J. Olson, P.C.
8180 Greensboro Drive, #1070
McLean, Virginia 22102-3823
(703) 356-5070



MARK B. WEINBERG
Weinberg & Jacobs
One Central Plaza, Suite 1200
Rockville, Maryland 20852
(301) 468-5500

Attorneys for
Free Speech Coalition, Inc.






CORPORATE DISCLOSURE STATEMENT





The Amicus Curiae, Free Speech Coalition, Inc., is a Maryland not-for-profit corporation which issues no shares and has no parent or subsidiary companies.

TABLE OF CONTENTS

Page

CORPORATE DISCLOSURE STATEMENT i

TABLE OF AUTHORITIES iii

PRELIMINARY STATEMENT 1

STATEMENT OF FACTS 3

ARGUMENT 6

I. THE NEW YORK STATUTE VIOLATES THE RIGHT TO FREE SPEECH GUARANTEED BY THE FIRST AMENDMENT 6

A. New York's Charitable Solicitation Statute Imposes Intolerable and Unconstitutional Burdens Upon Charitable Organizations 6

1. New York has no right to tax certain speech activity 6

2. Evaluation of the Burden of New York's Tax on Free Speech Activity Must Take Account of the Burdens Imposed by Other Existing

Regulations 11

B. New York's Registration Fee for Professional Solicitors Constitutes an Impermissible Prior Restraint on Free Speech Activity and Violates the First Amendment 20

1. The District Court used an Incorrect Standard in Evaluating the Constitutionality of the Registration Fee 20

2. The Cases Relied Upon by the Defendants-Appellees Do Not Support Their Position 24

3. The Federal and State Cases Holding That Enforcement Costs Should Not Be Considered To Justify a Registration Fee on First Amendment Activity Are In Accord With Supreme Court and Second Circuit Precedent and Demonstrate that the New York Statute is Unconstitutional 31

II. THE NEW YORK STATUTE VIOLATES THE EQUAL PROTECTION CLAUSE OF THE FOURTEENTH AMENDMENT . 37

CONCLUSION 39

TABLE OF AUTHORITIES



Cases Page

Adlerstein v. City of New York, 174 N.Y.S.2d 610, 612 (Sup. Ct. N.Y. Co.), aff'd 181 N.Y.S.2d 165 (First Dept. 1958), aff'd 185 N.Y.S.2d 821, 158 N.E.2d 512 (1959) 34

Broadway Books, Inc. v. Roberts, 642 F. Supp. 486 (E.D. Tenn. 1986) 25, 28, 29

Buckley v. Valeo, 424 U.S. 1 (1976) 10

Central Florida Nuclear Freeze Campaign v. Walsh, 774 F.2d, 1515 (11th Cir. 1855), cert. denied, 475 U.S. 1120 (1986) 30, 32

Chester Branch NAACP v. City of Chester, 253 F. Supp. 707 (E.D. Pa. 1966) 34

Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1978) 9

Cox v. New Hampshire, 312 U.S. 56 (1941) 29, 30

Eastern Connecticut Citizens Action Group v. Powers, 723 F.2d 1050 (2d Cir. 1983) 33, 34

Ellwest Stereo Theater, Inc. v. Boner, 718 F. Supp. 1553, 1574-75 (M.D. Tenn. 1989) 28

Fernandes v. Limmer, 663 F.2d 619 (5th Cir. 1981) 32

First National Bank v. Bellotti, 435 U.S. 765 (1978) 10

Holy Spirit Association for the Unification of World Christianity v. Hodge, 582 F.Supp. 592 (N.D. Tex. 1984) 34

Hull v. Petrillo, 439 F.2d 1184 (2d Cir. 1971) 32

Metromedia, Inc. v. City of San Diego, 453 U.S. 490 (1981) 21

Mobile Sign, Inc. v. Town of Brookhaven, 670 F.Supp. 68 (E.D.N.Y. 1987) 25, 29

Moffett v. Killian, 360 F.Supp. 228 (Conn. 1973) 34

Murdock v. Commonwealth of Pennsylvania, 319 U.S. 105 (1943) 24, 31, 32, 34

NAACP v. Button, 371 U.S. 415, 444 (1963) 10

National Awareness Foundation v. Abrams, 812 F. Supp. 431 (S.D.N.Y. 1993) 5, 6, 22, 25, 38

National Awareness Foundation v. Abrams, 848 F.Supp. 511 (S.D.N.Y. 1994). 5

National Bellas Hess v. Department of Revenue, 386 U.S. 753 (1967) 9, 19

Nationalist Movement v. City of Cumming, Forsyth County, Georgia, 913 F.2d 885 (11th Cir. 1990), aff'd, 934 F.2d 1482 (11th Cir. en banc 1991), aff'd, sub nom. Forsyth County, Georgia v. Nationalist Movement, ___ U.S. ___, 112 S.Ct. 2395 (1992) 30

O'Brien v. United States, 391 U.S. 367 (1968) 21

Quill Corp. v. North Dakota, ___ U.S. ___, 112 S.Ct. 1904 (1992) 8

Riley v. National Federation of the Blind of North Carolina, 487 U.S. 781 (1988) 11-13, 22, 23

Sable Communications of California, Inc. v. FCC, 492 U.S. 115, 128-31 (1989) 23

Secretary of Maryland v. Joseph H. Munson Co., 467 U.S. 947 (1984) 11-13, 22, 23

Sperling v. Valentine, 28 N.Y.S.2d 788, 792 (Sup. Ct. N.Y. Co., 1941) 34, 36

Stonewall Union v. City of Columbus, 931 F.2d 1130 (6th Cir. 1991), cert. denied, 112 S.Ct. 275 (1991) 26, 30

Streich v. Pennsylvania Commission on Charitable Organizations, 579 F.Supp. 172 (M.D.,Pa. 1984) 26-28

Torsoe Bros. Construction v. Board of Trustees, 375 N.Y.S.2d 612 (2d Dept. 1975) 25, 26, 28

United States Labor Party v. Codd, 527 F.2d 118 (2d Cir. 1973) 25, 33

Village of Schaumburg v. Citizens for a Better Environment, 444 U.S. 620 (1980) 11-13, 21-23

Wickman v. Firestone, 500 So.2d 740 (Fla. Dist. Ct. App. 1987) 26





Other

Annual Survey of State Laws Regulating Charitable Solicitations, Issue 1, 1994 (American Assocation of Fund-Raising Counsel, Inc.) App. A

Cook, Assault on Freedom, The Philanthropy Monthly, May, 1994 15

Nowak & Rotunda, Constitutional Law 4th Ed., (West Publishing, 1991) 2



PRELIMINARY STATEMENT

STATEMENT OF INTEREST OF THE FREE SPEECH COALITION, INC.



This Amicus Curiae Brief is submitted on behalf of the Free Speech Coalition, Inc., in support of the position advocated by the Plaintiffs-Appellants. The Free Speech Coalition, Inc. (hereinafter "Free Speech Coalition" or "Coalition"), as amicus curiae, urges reversal of the judgment of the United States District Court for the Southern District of New York, which upheld New York's charitable solicitation law requiring professional solicitors to pay an annual registration fee.

The Free Speech Coalition is a nonprofit social welfare organization incorporated under the laws of the State of Maryland, whose tax-exempt status as an organization described in Section 501(c)(4) of the Internal Revenue Code has been recognized by the Internal Revenue Service. The purposes of the Coalition include protection of human and civil rights secured by law, such as the right of free speech at issue in this litigation, study and research related to such rights, and publication of papers designed to educate its members, the public, and government officials concerning such rights. The Coalition is a membership organization comprised of nonprofit organizations that solicit contributions throughout the country (and for-profit firms that serve nonprofit organizations), including some which may be assisted in their activities by fundraising solicitors subject to the registration fee being challenged in this case.

The Free Speech Coalition believes that the issue of free speech presented to this Court in this case is of special importance to the Nation, affecting not only the appellants, the Coalition, and its members, but also citizens and organizations throughout the country. Although at present not directly affected by the particular registration fee that the Plaintiffs-Appellants have challenged herein as being unconstitutional, the Free Speech Coalition observes that such a burdensome registration fee, like similar fee-imposing provisions in other state charitable solicitation statutes throughout the country, has a most deleterious impact upon the First Amendment activities and other constitutionally-protected rights of nonprofit organizations.(1)

The Free Speech Coalition's view of the problems raised by state regulation may be somewhat wider than that of the Plaintiffs-Appellants in this case, if only because of the diversity of its membership and the issues confronting their own First Amendment activities. It is that broader perspective that the Coalition brings in the amicus curiae brief presented to this Court, and it is that perspective that makes submission of an amicus curiae brief helpful to the Court in this particular case. The Coalition believes that the issue of the statute's constitutionality was decided wrongly by the district court, and that this court should be further apprised of the potential impact of such a ruling on nonprofit organizations and citizens throughout the United States.(2)

STATEMENT OF FACTS

The Plaintiffs-Appellants, two "charitable organizations" and five individuals who are "professional solicitors,"(3) filed suit against the State of New York (by bringing this action against the State's Attorney General and Secretary of State), seeking a declaration that Article 7-A of New York's Executive Law (hereinafter "the New York statute" or the "New York Charitable Solicitation statute"), is unconstitutional, and seeking an order enjoining enforcement of Section 173-b(1) of the New York statute, which requires that "professional solicitors" pay an annual registration fee of $80 to the State.

The Plaintiffs-Appellants believe and allege that the New York statute violates their free speech rights, guaranteed by the First Amendment to the United States Constitution, by charging an unreasonable fee as a precondition to engagement in constitutionally-protected activity. They also believe and allege that the New York statute violates their rights to equal protection of the law under the Fourteenth Amendment by unduly discriminating against them on the basis of the content of their speech and/or based upon the nature of their employment.

It is undisputed that the annual revenue derived from the $80 fee assessed against professional solicitors by the New York statute exceeds the administrative costs incurred by New York's Office of Charities Registration. (Joint Stipulation of Facts, para. 40, A-69.) In fact, it is clear that such revenues from the filing fees of professional solicitors greatly exceed the estimated administrative costs (only in excess of $20,000) of the Office of Charities Registration. After 1989, when the $80 fee became effective, the excess has been between $80,000 and $120,000 per year, which is four to six times the amount of such administrative costs. (Joint Stipulation of Facts, para. 22, A-64-65.)

The Office of Charities Registration ("OCR") is the branch of the New York Secretary of State's office which is empowered to administer the registration provisions, as well as enforcement elements of the New York statute. (Joint Stipulation of Facts, paras. 19, 23-26; A-64-65.)

Defending against the claim that the registration fee for professional solicitors is unconstitutional, the Defendants-Appellees maintain, and the lower court held, that the fee was properly measured by costs related to enforcement of the New York statute by the State Attorney General's Office, as well as by the OCR's administrative costs related to issuance of the professional solicitor's license. According to the district court, the fact that revenues from the fee greatly exceeded the administrative costs did not render the statute unconstitutional. The court offset such excess revenues against the enforcement costs incurred by the State Attorney General's Office, which also has responsibility for enforcement of New York's entire Charitable Solicitation statute, but has nothing to do with registration or administration under Section 173-b(1). (Joint Stipulation of Facts, paras. 27-29, 31-033, A-65-67.) As a result, the First Amendment claim was rejected. National Awareness Foundation v. Abrams, 848 F. Supp. 511, 511-12 (S.D.N.Y. 1994).

With respect to the equal protection claim, it is undisputed that "professional solicitor," for purposes of the registration and fee requirements imposed by Section 173-b(1) of the New York statute, does not include any employee, officer, or volunteer of a "charitable organization" or "fund raising counsel," as those terms are defined in the New York statute. The Plaintiffs-Appellants maintain that the identity of a fundraiser's employer is an unconstitutional basis upon which to impose the fee, and that the statutory scheme also unconstitutionally discriminates against smaller charitable organizations that lack cost-effective alternatives to the use of professional solicitors to conduct their solicitations. The Defendants-Appellees argue, and the district court held, that the distinction among professional solicitors made by the New York statute serves a substantial government interest, and that proof of a professional solicitor's inability to afford the registration fee would not prejudice a charitable organization because professional solicitors are not necessary to conduct fundraising solicitations. Accordingly, the equal protection claim was rejected. National Awareness Foundation v. Abrams, 812 F. Supp. 431, 435 (1993).

ARGUMENT

I. THE NEW YORK STATUTE VIOLATES THE RIGHT TO FREE SPEECH GUARANTEED BY THE FIRST AMENDMENT.

A. New York's Charitable Solicitation Statute Imposes Intolerable and Unconstitutional Burdens Upon Charitable Organizations

1. New York has no right to tax certain speech activity

The New York statute imposes substantial burdens on those soliciting contributions, including charitable organizations in the State of New York as well as those assisting them, irrespective of whether the solicitors have a physical presence within New York or any other connection to New York.(4) As the Plaintiffs-Appellants have effectively demonstrated on this appeal, the "professional solicitor" regulations found in Section 173-b(1) of the New York statute weigh heavily on the free speech rights of charitable organizations and professional solicitors. What this Court views in the parties' briefs, however, is merely a single state's contributions to the regulatory burdens imposed on charitable organizations as they attempt to carry out their important work. In fact, as will be discussed below, most other states also impose additional, burdensome regulations on charitable organizations.

It would appear that at least some of the plaintiffs are not New York residents. (See Joint Stipulation of Facts, paras. 4-6, 8, A-59-61.) The Free Speech Coalition does not agree that the State of New York has the right to indirectly tax nonresident, nonprofit charitable organizations, operating on a national level whose only contact with the State is the distribution of information and solicitation of contributions by mail or telephone in New York by assessing a registration fee on such organizations or on professional solicitors who may be assisting them in their activities. The registration fee is nothing but a tax on professional solicitors, and concomitantly, the charitable organizations that employ them.

There are a number of reasons why such a system of taxation on free speech activities is an impermissible infringement on rights guaranteed by the Constitution, including established legal precedent that such activity in the state by nonprofit charitable organizations affords no sufficient nexus for such a tax. Also, under the Commerce Clause, states lack the authority to interfere with interstate commerce through imposition of such taxes and regulatory burdens on the activities of nonresidents. See Quill Corp. v. North Dakota, ___ U.S. ___, 112 S.Ct. 1904 (1992) (confirming holding of National Bellas Hess that state use tax on mail order house whose only contact with state is by mail or common carrier violates Commerce Clause); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1978) (state charge on interstate activity may survive Commerce Clause scrutiny only if four-pronged test, including substantial nexus between activity and state, is met); National Bellas Hess v. Department of Revenue, 386 U.S. 753 (1967) (state use tax on mail order house whose only contact with state is by mail or common carrier violates Due Process and Commerce Clauses).(5)

In this case, no such Due Process Clause or Commerce Clause question apparently is pending before this Court as such. Nevertheless, the rationale in Quill and its precursors merits mention, for there is a related First Amendment issue arising out of the free speech burdens imposed on charitable organizations by laws such as New York's Charitable Solicitation statute. The First Amendment issue is related to the jurisdictional issue because both questions spring from the state's assertion of the right to regulate nonprofit advocacy organizations engaging in protected speech while soliciting contributions in New York. The legitimacy of that claim of a right to regulate protected speech must be measured by carefully crafted exceptions to the rule against government censorship of free speech. If it is first found that there is no Due Process or Commerce Clause prohibition against state regulation, the First Amendment requires that the government then identify a compelling state interest for the imposition of the tax. See, e.g., Cantwell v. Connecticut, 310 U.S. 296, 311 (1940) (statute regulating First Amendment activity invalid because no clear and present danger to a substantial interest of the state was defined); NAACP v. Button, 371 U.S. 415, 444 (1963) (state's purported interest in ensuring high professional standards for legal profession not sufficient to justify infringement on First Amendment activity). And even if one is found, the courts will apply strict standards in determining whether that tax on the exercise of First Amendment rights is the least intrusive measure for achieving that substantial, compelling interest. See, e.g., Buckley v. Valeo, 424 U.S. 1 (1976) (statutory limitations on campaign expenditures, directly related to the expression of political views, invalid because of insufficient nexus between campaign expenditures and corruptive influence upon the electoral process); First National Bank v. Bellotti, 435 U.S. 765 (1978) (statute prohibiting corporate expenditures to influence vote on referenda lacked a legitimate, compelling state interest that would justify infringement on First Amendment activities).

2. Evaluation of the Burden of New York's Tax on Free Speech Activity Must Take Account of the Burdens Imposed by Other Existing Regulations

In determining the constitutionality of any regulation of free speech activity, the actual and prospective effects of the regulation must be considered, and this can include the cumulative burden on free speech activity imposed by that regulation together with other laws restricting First Amendment activity. Often, however, resort need not be made to other laws because of the clearly unconstitutional nature of the restriction itself, under the First Amendment test referred to above.

Three particularly relevant Supreme Court opinions, decided over an eight-year span, speak directly to this process of evaluating the impact of such a regulatory scheme on First Amendment free speech activity. See Village of Schaumburg v. Citizens for a Better Environment, 444 U.S. 620 (1980); Secretary of Maryland v. Joseph H. Munson Co., 467 U.S. 947 (1984); Riley v. National Federation of the Blind of North Carolina, 487 U.S. 781 (1988). In all three cases the Supreme Court struck down state regulatory measures that had the effect of curbing the free speech activities of charitable organizations by restricting what such organizations could and could not do. In Schaumburg, the invalidated ordinance prohibited charitable solicitation activity if the organization did not use at least 75 percent of the contributions for "charitable purposes," which were defined to exclude fundraising and administrative expenses. In Munson, the state statute similarly prohibited a charitable organization from paying such expenses of more than 25 percent of the amount raised, but included a waiver provision whereby the organization could exceed that amount if it could show that such a limitation would effectively prevent the organization from raising contributions. In Riley, the state had adopted a three-tiered system for defining "reasonable" and "presumed unreasonable" fees that a charitable organization could pay to a professional fundraiser. In all three cases, the government attempted to justify the laws or regulations as efforts to protect the public by preventing fraudulent activity by solicitors of contributions. In Munson and Riley the government also argued that the laws or regulations were necessary to protect the charitable organizations from themselves. The Supreme Court dismissed those purported justifications, holding that solicitation of charitable contributions is constitutionally-protected speech, which could be regulated, if at all, only to serve a compelling governmental interest, and then only in the least intrusive way possible. After the Court subjected the laws to exacting First Amendment scrutiny, it determined that, in each case, the asserted regulatory grounds were not drawn narrowly enough to achieve the asserted regulatory interests.

While this case presents a regulation somewhat different from those struck down by the U.S. Supreme Court in the Schaumburg/Munson/Riley decisions, the New York Charitable Solicitations statute violates the First Amendment as well. In each situation, the state's zeal in trying to protect its citizens from fraud has run roughshod over protected First Amendment activities that were benign to begin with, and this should be clear from the record in this case with respect to the New York statute.

The specific First Amendment ground for reversal advanced by the Plaintiffs-Appellants in this case is that the New York statute's tax upon professional solicitors imposes an unreasonable burden on the exercise of free speech protected by the First Amendment. The Free Speech Coalition agrees that the New York fee for professional solicitors, assuming a sufficient theoretical government interest for assessing any fee at all, is essentially a tax and a revenue-raising device which is not a measure narrowly designed to defray the costs of administering the registration provision. Therefore, it is not the least intrusive means of serving the asserted governmental interest in registering professional solicitors.

While this is sufficient cause for invalidating the New York statute, there are additional facts demonstrating that New York's regulatory scheme, by itself and placed into the context of the framework of charitable solicitation laws of many states and localities, encroaches on constitutionally-protected activities. Before detailing the legal precedent supporting the argument of the Plaintiffs-Appellants, therefore, it is important to take note of the other burdens imposed by the New York statute on charitable organizations. They are substantial. Charitable organizations are required to submit a registration application. They must submit numerous documents related to the establishment and operation of the organization (including annual reports, articles of incorporation, bylaws, and "other operative organizational documents," Section 172, Article 7-A, New York Executive Law). They must pay registration and filing fees, id., Section 172-a. Professional fundraisers, including fundraising counsel, are also required to register, obtain a $10,000 surety bond, and pay an $800 fee annually. Id., Section 173.

The scope or depth of this regulatory activity is no secret. Indeed, the Defendants-Appellees virtually boast about the weight of the burdens placed on charitable organizations in New York:

charitable organizations, particularly large ones, are subject to a myriad of regulations and fees. They are required by Article 7-A to register and pay registration and filing fees, whether or not they use the services of professional fund raisers or professional solicitors. EL §§ 172, 172(a), 172(d).

Moreover, charitable organizations which are governed by EPTL § 8-1.4 are required to file reports with, and pay annual filing fees to, the Attorney General in addition to their filing and fee-paying obligations under Article 7-A. These fees are calculated on a sliding scale based on the assets and income of the organizations, with large charitable organizations paying filing fees of as much as $1500 per year.... [Brief for Defendants-Appellees, p. 24. (emphasis added)]

Those regulatory requirements imposed on charitable organizations are not all directly in issue on this appeal. Nevertheless, with respect to the First Amendment claim in this litigation, they are relevant regarding the extent of the cumulative burden imposed by the State of New York on free speech activities.

The premise for constitutional protections by charitable organizations in the conduct of their work has nothing to do with legislative privilege. It is embedded in the very fabric of our form of government. To deny nonprofit organizations freedom of speech including not only the right to address citizens on topics of one's own choosing, but other important freedoms such as the right to associate with those of one's own choosing and the right to petition the government for redress of grievances is a frontal attack on fundamental rights expressly guaranteed by the First Amendment. Excessive regulation constitutes a denial of First Amendment freedoms.

The importance of these truths cannot be overstated. Since the conflict between zealous regulators and citizens' First Amendment rights repeatedly confronts the judiciary, there is a legitimate question about why the regulators persistently try to curb the rights of those who would solicit contributions to support their worthwhile causes. The Free Speech Coalition believes that the fundamental reason for such legislation is the regulators' mistaken belief about the value of nonprofit organizations in our society and why their activities are protected.

One error traditionally committed by regulators, for example, is to make the unwarranted assumption that high solicitation costs imply dishonesty or fraud. Despite the Supreme Court's specific pronouncements on the subject which on at least three separate occasions addressed both the legal and logical infirmity of the view that fundraising activity doe not imply dishonesty, but rather is integrally connecte to free speech activities, see Schaumburg, supra, 444 U.S. at 636-38; Munson, supra, 467 U.S. at 964-68; Riley, supra, 487 U.S. at 790-95 the states continue to focus their regulatory efforts on professional fundraisers, fundraising counsel, and professional solicitors, imposing fee and bonding requirements such as those found in the New York statute.(6)

Certainly, New York State is not alone in its misdirected zeal to protect its citizens by imposing excessive fees and other burdens upon free speech activity connected with charitable solicitations. In fact, analysis of the impact of New York's charitable solicitation law would be incomplete without considering the cumulative effect of such laws on charitable organizations throughout the United States. As constitutionally problematic as the New York statute at issue in this case may be for the Plaintiffs-Appellants, for the Free Speech Coalition, and for other charitable organizations, its debilitating effect on First Amendment activities appears even more clearly after reviewing the aggregation of requirements imposed on charitable organizations soliciting funds nationwide.

Appendix A to this Amicus Curiae Brief is a chart surveying state laws regulating charitable solicitations.(7) It is intended to give this Court broader perspective and perhaps a fuller appreciation for the extent of, and the cumulative burden imposed by, state regulatory efforts limiting free speech activities in the United States at the present time. As is evident from the chart (Appendix A), annual registration is presently required of charitable organizations in at least 38 of the 50 states, as well as in a number of cities and counties, and there are numerous other filing requirements as well. The financial consequences of registration alone are daunting. According to the chart, registration/licensing fees for charitable organizations can total several thousand dollars annually.(8) In addition, the chart (Appendix A) documents that "Paid Solicitors" and "Fund-Raising Counsel" are subject to additional registration/licensing fees and bonding requirements.

If a charitable organization would be subject to New York filing fees alone of $1,500 per year, as admitted in the brief of the Defendants-Appellees, together with the $10,000 bonding requirement and an $800 annual fee imposed upon its fund raising counsel, along with additional fees imposed upon independent professional solicitors who may be assisting it, and if several of the more than 40 other regulating states (and hundreds of counties and cities) in this country impose other requirements even approaching the burdens imposed on charitable organizations by the New York statute and they do, as is evident from Appendix A the costs imposed upon free speech in this country have surely gotten out of hand. Can there be any question whether the cumulative effect of these laws inhibits free speech activities by charitable organizations? Surely, the power to tax in these circumstances risks becoming the power to effectively censor free speech.

The point of this showing by the Free Speech Coalition is that the effect of the New York statute on free speech activities by charitable organizations should not be viewed in isolation. Resolution of the strict legal point briefed below and discussed at great length by the parties in their respective briefs may depend upon the narrow issue as to whether the fee on professional solicitors is essentially a revenue-raising tax or merely a measure incidentally raising sufficient funds to defray the administrative expenses of registration. However, a review of the regulatory schemes of New York and its sister states and political subdivisions presents a larger, more disturbing picture.(9)

It can be difficult for organizations that are operative and intact to prove that regulatory provisions cannot be complied with; indeed, when impossibility of compliance becomes the issue, it may well be too late to litigate. For purposes of evaluating the constitutionality of a regulatory scheme restricting free speech, moreover, impossibility of compliance is not the issue, and it is the government that must demonstrate its compelling interest in imposing such restrictions, as well as the its precision in narrowing such restrictions to avoid unnecessary intrusion into constitutionally-protected areas. Nevertheless, most organizations and individuals cannot fight unreasonable government regulation because it is too daunting and expensive a task to undertake. When the battle is launched, however, and protected free speech activity is being taxed, as it is in this case, it is critical for the judiciary to address the enormity of the issue at stake. It is particularly important that this Court consider the tremendous suppression of free speech activity being carried out in the form of charitable solicitation statutes throughout the United States.

B. New York's Registration Fee for Professional Solicitors Constitutes an Impermissible Prior Restraint on Free Speech Activity and Violates the First Amendment

1. The District Court used an Incorrect Standard in Evaluating the Constitutionality of the Registration Fee

The fundamental flaw in the State's position in addition to its tremendous unfairness, and its failure to be supported by the case law is that, if it were determined to be correct, states could easily bankrupt nonprofit organizations, or at least effectively prohibit them from soliciting contributions, by assessing high registration fees. According to the Defendants-Appellees, all that would be necessary to justify such high registration fees would be the state's decision to expend virtually unlimited public funds on enforcement, a decision that probably would be unassailable by any challenger to the fee structure.(10) The Free Speech Coalition submits that the State's position is untenable and has been soundly rejected by New York state courts as well as by various federal courts in cases where regulatory bodies, with some degree of contempt for the underlying rights involved, have made similar attempts to dictate the price of free speech by establishing costly compliance mechanisms.

The Defendants-Appellees' argument that enforcement costs should be considered in setting a fee for free speech activities seems to stem from a faulty premise about the reason why any fee, license, or tax on free speech activities would be permissible in any case. Generally, such a tax is not permissible and would only be allowed if a compelling State interest dictated the need for regulation. See, e.g., Schaumburg, supra, 444 U.S. at 636, O'Brien v. United States, 391 U.S. 367, 376 (1968); see also Metromedia, Inc. v. City of San Diego, 453 U.S. 490 (1981) (relating to commercial speech). But even in the face of such an interest, the state's authority to tax free speech activities is narrow. It may not, as the Defendants-Appellees suggest, do whatever it "thinks best." That has been made clear by the Supreme Court repeatedly over the past 50 years. The warning peal of invalidation rings loudly over unconstitutional (if well-intentioned) regulations in the Schaumburg, Munson, and Riley decisions.

The standards for determining the constitutionality of a tax on free speech activities are well-established. Assuming, as the district court did in this case, that there is jurisdiction and the authority to regulate at all, the constitutional analysis must begin with the purported objective of the regulation. The lower court held that "New York's interest in protecting the general public by regulating fundraisers otherwise unaccountable seems beyond dispute." National Awareness Foundation v. Abrams, 812 F. Supp. 431, 435 (S.D.N.Y. 1993). The Defendants-Appellees' brief states that prevention of fraud and the provision of information to potential donors are the purported justifications for the regulatory scheme. See Brief for the Defendants-Appellees, p. 4. In the abstract, these are undeniably worthy goals for government, although one might seriously question whether they are necessary in view of the existence of other, far-reaching federal laws compelling disclosure by nonprofit organizations and regulating fraudulent conduct, as well as relevant state tort, criminal, and civil enforcement laws and remedies. See, e.g., 26 U.S.C. sec. 6113 (disclosure of nondeductibility of contributions); 39 U.S.C. sec. 3005(a) (false representations in postal communications); 18 U.S.C. sec. 1341 (mail fraud). Nevertheless, it is not enough to hypothesize any conceivable legislative aim if existing laws already accomplish the regulation's legitimate basis. Cf. Riley, supra, 487 U.S. at 798-800. See Sable Communications of California, Inc. v. FCC, 492 U.S. 115, 128-31 (1989).

Furthermore, there must be a logical nexus between the New York statute and those goals. There might be some dispute on this issue (see, e.g., fee-limiting regulations struck down in Schaumburg, Munson, and Riley, which were based upon a specious and faulty premise that high fundraising fees encourage fraud), although the district court seemed to assume that connection in its determination that Section 173-b(a) serves a substantial government interest. In fact, it is not clear that requiring certain professional solicitors to register and pay a fee serves any important government interest at all.

The final, determinative question is whether the statute is designed or "narrowly tailored," Riley, supra, 487 U.S. at 789, to accomplish the legislative goal. The regulation of protected speech must be done by the "least restrictive means," Sable Communications of California, supra, 492 U.S. at 126. The Defendants-Appellees have argued that the statute at issue in this case is narrowly tailored because the revenue from the registration fee provision in question is reasonably related to the expenses of administering the statute (including enforcement costs). It helped persuade the district court that the fee provision was not constitutionally infirm. However, the State argued and the district court applied the wrong legal test, and thereby arrived at the wrong legal conclusion.

2. The Cases Relied Upon by the Defendants-Appellees Do Not Support Their Position

The rule for assessing the constitutionality of a fee imposed by the state upon the exercise of free speech protected by the First Amendment is found in Murdock v. Commonwealth of Pennsylvania, 319 U.S. 105 (1943). Assuming that the imposition of a fee is appropriate and otherwise lawful, Murdock states that

the fee must be nominal and designed to help defray the administrative expense of issuing the required permit or license. The registration fee at issue in this case does not meet those standards. The fee clearly is not nominal.(11) It is undisputed that the revenue produced by the registration fee charged upon professional solicitors far exceeds the administrative expenses involved in processing the registration applications. See Joint Stipulation of Facts, paras. 26-40 (A-58-70).

Before exploring the ramifications of the State's position, the case law addressing the imposition of reasonable registration fees upon First Amendment activities should be reviewed in depth. Since both sides claim legal support from various judicial decisions, it may appear that the courts have gone both ways on the question. In reality, however, as the Plaintiffs-Appellants have pointed out (Plaintiffs-Appellants' Reply Brief, pp. 1-8), careful review of the relevant cases reveals that there is no support for the State's justification of its tax on free speech activities.

The district court refused to accept the argument that an $80 registration fee for professional solicitors could not by definition be nominal. It was apparently influenced by the "general rule," recited by the court in Torsoe Bros. Construction v. Board of Trustees of Village of Monroe, 375 N.Y.S.2d 612, 617 (2d Dept. 1975), that a license or permit fee imposed pursuant to the power to regulate may not charge a sum greater than that reasonably necessary to cover the costs of issuance, inspection and "enforcement." See National Awareness Foundation v. Abrams, supra, 812 F. Supp. at 434. The court also cited the district court decisions in Broadway Books, Inc. v. Roberts, 642 F. Supp. 486 (E.D. Tenn. 1986) and in Mobile Sign, Inc. v. Town of Brookhaven, 670 F. Supp. 68 (E.D.N.Y. 1987), and the decision of this Court in United States Labor Party v. Codd, 527 F.2d 118 (2d Cir. 1973), which recognized that certain enforcement costs are appropriate to include in the determination of the reasonable administrative costs necessary to sustain the constitutional validity of a license fee or permit. In addition, the State contends that its position is supported by the decisions in Streich v. Pennsylvania Commission on Charitable Organizations, 579 F. Supp. 172 (M.D. Pa. 1984), Wickman v. Firestone, 500 So.2d 740 (Fla. Dist. Ct. App. 1987), and Stonewall Union v. City of Columbus, 931 F.2d 1130 (6th Cir. 1991), cert. denied, 112 S.Ct. 275 (1991). In fact, however, although a glimpse of the technical results of those decisions might seem to lend credence to the State's position, a close analysis of the opinions themselves does not really support either the State's position or the district court's decision to uphold the registration fee in this case.

It is true that the above cases relied upon by the State and the district court stand generally for the proposition that certain so-called "enforcement costs" may be counted when determining whether the administrative expenses far exceed the revenue produced by a registration fee whose constitutionality is being scrutinized. However, the "enforcement costs" described in those cases are quite different from the enforcement costs on which the State seeks to justify its registration fee in this case. For the cases are clear that, where "enforcement costs" have been allowed as a component of a fee for carrying out First Amendment activities, such costs are administrative enforcement costs incidental to the registration/permit process, not the unlimited general enforcement costs for which the Defendants-Appellees contend in this case.

In Torsoe Bros. Constr. Corp. v. Board of Trustees of Village of Monroe, 49 A.D.2d 461, 375 N.Y.S.2d 612 (2d Dept. 1975), for example, the court struck down a proposed regulatory fee (a tap-in fee to reconnect a new water line with the village water system) charged for revenue purposes (i.e., to offset the cost of general governmental functions) as an unauthorized tax. While recognizing that a regulatory fee "cannot be greater than the sum necessary to cover the costs of issuance, inspection, and enforcement," 375 N.Y.S.2d at 617, those terms were not defined. The point of the holding was that the fee charged was "clearly disproportional to the cost of issuance, inspection and regulation." Id.

Similarly, in Streich v. Pennsylvania Commission on Charitable Organizations, supra, a decision that sustained in part and struck in part Pennsylvania's charitable solicitation statute as it existed in 1984, although the provisions requiring "clearly nominal" registration fees were upheld as "substantially related to the costs of supervising and policing the charities," 529 F. Supp. at 177, it is clear that the decision was based upon a theory of "enforcement" that is quite different from what the Defendants-Appellees argue in this case. In Streich, the court accepted that:

the legislature has made a rough approximation between the annual registration fee and the cost of processing a charity's registration and financial information. While the correlation between fee and cost may not be exact in all situations, it is nonetheless a reasonable correlation based on the cost of enforcing the statute.... We believe that the fees are reasonable in light of required enforcement procedures. [579 F. Supp. at 177 (emphasis added).](12)

The "enforcement" fees in Streich, like those in Torsoe Bros., actually were regulatory fees directly related to the licensing process. The use of the word "enforcement" in Streich, therefore, does not support the State's position in this case.

Nor does the opinion in U.S. Labor Party v. Codd, supra, where it had been determined by the district court that the administrative costs "of processing the issuance of the permit" (527 F.2d at 119) exceeded the amount of the permit fee, and that was clearly the basis on which the fee was upheld. In Broadway Books, Inc. v. Roberts, supra, the court carefully explained that the annual license fee which related directly to the maintenance of sanitary conditions was fair based upon the costs of processing each application and "enforcing the ordinance for one year for each establishment." 642 F. Supp. at 493. Thus, even assuming that the district court's opinion upholding the fee was correct, the disputed fee was not a general revenue measure, unlike the New York fee for professional solicitors in this case.(13)

In Mobile Sign, Inc. v. Town of Brookhaven, 670 F. Supp. 68 (E.D.N.Y. 1987), the permit fee was likewise upheld because the costs incidental to monitoring (for safety reasons) compliance with the permit justified the amount of the fee for each applicant. That situation is markedly different from the instant case, where the New York authorities seek to justify the arbitrary professional solicitor's fee of Section 173-b(1) by reference to investigative and penal law enforcement expenditures of the state attorney general's office, an office that has enforcement jurisdiction over all of New York's state laws and has nothing to do with the registration requirements.(14)

The Free Speech Coalition agrees with Plaintiffs-Appellants that First Amendment "parade" cases should be distinguished from other First Amendment licensing fee cases. (See Plaintiffs-Appellants' Reply Brief, pp. 3-4.) The issue in the parade cases is whether there can be any fee, aside from a nominal one, for a license to speak. The Eleventh Circuit clearly has answered this question in the negative. See Central Florida Nuclear Freeze Campaign v. Walsh, 774 F.2d, 1515 (11th Cir. 1855), cert. denied, 475 U.S. 1120 (1986); Nationalist Movement v. City of Cumming, Forsyth County, Georgia, 913 F.2d 885 (11th Cir. 1990), aff'd, 934 F.2d 1482 (11th Cir. en banc 1991), aff'd, sub nom. Forsyth County, Georgia v. Nationalist Movement, ___ U.S. ___, 112 S.Ct. 2395 (1992).

In Stonewall Union v. City of Columbus, supra, however, the Court of Appeals purported to rely upon Cox v. New Hampshire, 312 U.S. 569 (1941), in sustaining a licensing fee that was fixed, on a case-by-case basis, so as to recoup not only the costs incident to processing the parade permit application, but also the expenses of providing traffic control for each particular parade. The flat fee upheld in Stonewall Union was "directly apportioned to the administrative cost of processing the permit application" (931 F.2d. at 1133) and the fee which involved only direct costs related to each permit applicant was found not to be a profit-making venture for the city (931 F.2d at 1136).

Obviously, on this point of including costs for police protection in fees for parade permits, the Eleventh Circuit and Sixth Circuit are in direct conflict, and the Supreme Court has chosen thus far not to resolve the question. Nevertheless, a holding on the question whether there can be any fee, aside from a nominal one, for a license to speak is not necessarily critical to resolution of the case before this Court. The New York statute at issue in this case is unconstitutional irrespective of the fact that it imposes a fee that is not "nominal." Since the fee in question is clearly a revenue measure, and since the fee is not tied to the cost of issuing the permit to professional solicitors, but is designed to support a regulatory scheme for an entire industry, the statute is, for that reason alone, unconstitutional.

3. The Federal and State Cases Holding That Enforcement Costs Should Not Be Considered To Justify a Registration Fee on First Amendment Activity Are In Accord With Supreme Court and Second Circuit Precedent and Demonstrate that the New York Statute is Unconstitutional

The decisions striking down license or permit fees that impermissibly burden First Amendment free speech activities are straightforward and clear. They hold that the Constitution demands that such fees be nominal, and within the bounds of the administrative costs incurred in the licensing process. In Murdock v. Pennsylvania, supra, the Supreme Court determined that a license tax on religious colporteurs (who solicited funds as well as preached religious doctrines) was an unconstitutional condition on their pursuit of First Amendment activities. The Court differentiated the flat license tax in question, which was not acceptable, from a "nominal fee imposed as a regulatory measures to defray the expenses of policing the activities in question" (319 U.S. at 113-14). The lower federal courts, including this Court, have followed those guidelines in striking down ordinances which go beyond the parameters of potentially legitimate regulation.

In Central Florida Nuclear Freeze Campaign v. Walsh, supra, the Court of Appeals held that, although license fees are proper for the costs of administering an event, only nominal charges (and not unlimited charges for the costs of additional police protection) were constitutionally authorized for the use of public forums to further First Amendment activities. 774 F.2d at 1523. While there is no "magic number" in determining the constitutionality of a license or permit fee, there appears to be a consensus, consistent with the Murdock guidelines, that the fee charged must be reasonably connected with the costs of issuing the license. In Fernandes v. Limmer, 663 F.2d 619 (5th Cir. 1981), a $6.00 daily permit fee (to solicit at an airport) was found to be unconstitutional because of the lack of any demonstrated link between the fee and the licensing process. Id. at 633. In some cases, of course, no fee is appropriate at all. In Hull v. Petrillo, 439 F.2d 1184 (2d Cir. 1971), this Court confirmed that a $15 license fee to sell newspapers on city streets would be unconstitutional.

Even where registration of First Amendment activity would serve an important state interest, and a registration fee is enacted as a means of implementing that registration requirement, the fee cannot include a component for recovery of general policing or enforcement costs. In Eastern Connecticut Citizens Action Group v. Powers, 723 F.2d 1050 (2d Cir. 1983) (hereinafter "ECCAG"), this Court held specifically that an administrative fee unrelated to the cost incurred in processing an application for a license could not be constitutionally sustained where the license regulated the pursuit of free speech activities. The plaintiffs in ECCAG had sought permission to use government-owned land for a march dedicated to expressing opposition to planned development. They were told their right to use the property would be subject to several preconditions, including payment of an administrative fee of $200. This Court held that, unless the government showed that the fee was necessary "as a means of offsetting expenses associated with processing applications for access to property under its control" (723 F.2d at 1056), the administrative fee could not be sustained.(15)

There are many other relevant cases on the subject of license/permit fees regulating First Amendment activities, but the principles involved are distinct, narrow, and well-established. Assuming that there is any basis whatsoever for a fee restricting First Amendment activities, the clear principle of law is that the revenues from the fee must not exceed the administrative expenses related to the application/registration process. That is the lesson of Murdock, supra, and it is the holding of this Court in ECCAG, supra. And that lesson has been followed by the New York courts, as well as by other federal courts. See Sperling v. Valentine, 28 N.Y.S.2d 788, 792 (Sup. Ct. N.Y. Co., 1941) ("While prevention of threatened violations of substantive law is the object of all licensing, the cost of enforcement of the general regulations cannot be the measure of the fee charged."); Adlerstein v. City of New York, 174 N.Y.S.2d 610, 612 (Sup. Ct. N.Y. Co.), aff'd 181 N.Y.S.2d 165 (First Dept. 1958), aff'd 185 N.Y.S.2d 821, 158 N.E.2d 512 (1959) ("There is no constitutional warrant for putting the expense of regulating the business of electricians in the guise of a license fee."); see also Chester Branch NAACP v. City of Chester, 253 F. Supp. 707 (E.D. Pa. 1966) (case dismissed in view of defendants' failure to prove permit fee was reasonably calculated to defray costs of enforcing ordinance regulating use of sound amplifying equipment); Moffett v. Killian, 360 F. Supp. 228 (Conn. 1973) ($35 lobbying registration fee unconstitutional; far in excess of amount actually needed to administer registration permits.); Holy Spirit Association for the Unification of World Christianity v. Hodge, 582 F. Supp. 592, 604 (N.D. Tex. 1984) ($10 permit fee to conduct charitable solicitations unconstitutional because of, inter alia, no demonstrated link between fee and costs of the licensing process). These cases all expressly hold that to require payment of registration or licensing fees for permission to conduct First Amendment activities is unconstitutional in the absence of any reasonable connection between the revenues produced and the costs incurred by the licensing process.

Again, to the extent that the courts have used the word "enforcement" to describe the type of administrative costs which a regulatory fee can fund, the meaning of the word is quite different from that advocated by the Defendants-Appellees in this case. As pointed out in the Brief for Plaintiffs-Appellants (pp. 27-32), the Defendants-Appellees attempt to justify the $80 registration fee on professional solicitors by stating that its revenues defray not only administrative enforcement costs, but also costs incurred in enforcing the statutory scheme the New York charitable solicitation law designed to regulate the entire fundraising industry. The enforcement costs relied upon by the Defendants-Appellees are concededly not those incurred by the Secretary of State's Office of Charities Registration. Defendants-Appellees admit that the revenues received through the $80 registration fee exceed the administrative costs incurred by that office in administering Section 173-b(1). (See Joint Stipulation of Facts, paras. 19, 22, 40, A-63-64, 69-70.) By insisting that revenues from imposition of the professional solicitor's registration fee should be used to offset certain costs of the Attorney General's Office which office has nothing to do with administering the registration provision the Defendants-Appellees are arguing to impose general costs of government on individuals seeking to exercise their First Amendment rights. The Free Speech Coalition respectfully submits that the relevant legal precedent does not support such an interpretation, as the above analysis demonstrates. Moreover, if the Defendants-Appellees' contention were correct, there would be no effective limitation on the power of legislatures to regulate and effectively censor free speech activities by charitable organizations, such as the National Awareness Foundation and the Child Protection Program Foundation, two of the Plaintiffs-Appellants herein, or the Free Speech Coalition and its members. By expanding its bureaucracy to enforce anti-fraud registration requirements, any state could effectively prohibit individuals and organizations from both disseminating their opinions and perspectives and soliciting financial support. The State of New York is already a few steps down that road. While its anti-fraud provisions may be salutary and while it is possible that pure registration requirements designed to implement those provisions may pass constitutional muster the cost of enforcing anti-fraud provisions, including the registration requirement, may not legally be the basis for the registration fee. In the words of the New York court in Sperling v. Valentine, supra, "the cost of enforcement of the general regulations cannot be made the measure of the fee charged." 28 N.Y.S.2d, at 791-92. If it were otherwise, there would be no limit to the price that could be set for the exercise of free speech.

Since Section 173-b(1) of the New York statute, requiring an $80 registration fee for professional solicitors, reaps revenues far exceeding the costs of administering the registration provision, it imposes an unconstitutional burden on the exercise of free speech protected by the First Amendment and should be struck down.

II. THE NEW YORK STATUTE VIOLATES THE EQUAL PROTECTION CLAUSE OF THE FOURTEENTH AMENDMENT.

Although there is no question that the New York statute discriminates against those soliciting contributions, and that, even among those speakers, it discriminates by imposing registration requirements and a fee upon those who do not work for charitable organizations or fundraising counsel, the State of New York denies that there is discrimination against fledgling organizations or smaller groups that cannot afford to hire fund-raising counsel or a sufficient number of full-time personnel.

The Defendants-Appellees maintain that professional solicitors are not similarly situated to solicitors employed by charitable organizations or fundraising counsel. They state that the professional solicitors are not under the control of such organizations, and that the registration/fee provision of Section 173-b(1) is the only means of making professional solicitors accountable for their actions. The Free Speech Coalition respectfully suggests that the State's view is incorrect, and that the reason it has given to justify its registration/fee requirement is specious. While not suggesting that all possible regulations are constitutionally invalid, we would submit that the justification for extending a fee requirement to those not volunteering or in the employ of a charitable organization or fundraising counsel is neither logical nor legally supportable.

The Defendants-Appellees have no adequate answer to the point made by the Plaintiffs-Appellants that fledgling and smaller organizations are severely burdened by such a provision. It is not sufficient to argue that the regulatory web would be incomplete if it did not extend to independent professional solicitors working for a fee. The Defendants-Appellants maintain

that such persons otherwise would be "unaccountable," but there is no supportable basis for that assertion. Such persons would be accountable indeed, both to the organizations hiring their services and to the public, if they were to violate any valid law governing their conduct. The district court held that "protecting the general public by regulating fundraisers otherwise unaccountable" justified singling out professional solicitors for payment of the fee in question because it "served a substantial government interest." See National Awareness Foundation v. Abrams, supra at 435. Since the factual predicate for that conclusion that professional solicitors are otherwise unaccountable is incorrect, we would respectfully disagree.

CONCLUSION

For the foregoing reasons, the Free Speech Coalition supports the arguments of the Plaintiffs-Appellants that the district court's orders and judgments should be reversed and that Section 173-b(1) of the New York statute should be found unconstitutional.


Respectfully submitted,

NICHOLAS GILMAN
Gilman, Pangia & Balsamo
1815 H Street, N.W., #600
Washington, D.C. 20006
(202) 466-5100

*Counsel of Record
WILLIAM J. OLSON
JOHN S. MILES
William J. Olson, P.C.
8180 Greensboro Drive, #1070
McLean, Virginia 22102-3823
(703) 356-5070



MARK B. WEINBERG
Weinberg & Jacobs
One Central Plaza, Suite 1200
Rockville, Maryland 20852
(301) 468-5500

Attorneys for
Free Speech Coalition, Inc.





1. The Free Speech Coalition, comprised of diverse advocacy organizations which are active in the marketplace of ideas, submits that there are few more important questions for a democracy than the degree to which it allows than restrictions on social and political speech:

Unlike economic legislation, which is only a product of the political process, and, therefore may to some extent be subject to an inner political check, speech is part of the legislative process itself. Restriction of speech alters the democratic process and undercuts the basis for deferring to the legislation that emerges. The restraint of speech is often a short range aid to societal programs because it insulates the current government from criticism caused by debate. This natural tendency conflicts with the first amendment value of open debate. [Nowak & Rotunda, Constitutional Law, § 16.7, p. 942 (West, 4th ed. 1991).]

2. The Free Speech Coalition sought the written consent of the parties to the filing of its amicus curiae brief. It has received the written consent of the Plaintiffs-Appellants. Defendants-Appellees have refused to furnish such consent. Copies of letters from counsel for the parties evidencing these facts were filed with the Clerk as attachments to the Motion of Free Speech Coalition, Inc., for Leave to File Amicus Brief and for Leave to File Out of Time.

3. The status of the plaintiffs as "charitable organizations" and "professional solicitors," as defined by Section 173-a of the New York statute, has been stipulated by the parties. See Joint Stipulation of Facts, paras. 4-10(A-59-61). It would appear, however, that certain of the plaintiffs are not residents of the State of New York. See page 8, infra.

4. "Charitable organizations," as used in this Brief, does not refer only to organizations typically thought of as "charities," like the Red Cross or other relief groups, but is much broader and has the meaning ascribed to it by Section 171-a of the New York statute. As such, it includes a variety of groups conducting "benevolent, philanthropic, patriotic, or eleemosynary" activities, and which solicit funds to support those activities. Id. These are typically nonprofit organizations whose tax-exempt status has been recognized by the Internal Revenue Service. See, e.g., 26 U.S.C. secs. 501(c)(3) and 170 ("public charities"); 501(c)(4) ("social welfare" or "advocacy" organizations). The Free Speech Coalition is one comprised of various tax-exempt organizations, as well as for-profit organizations assisting them, and most of its member groups are section 501(c)(4), social welfare and advocacy organizations. These are "organizations whose primary purpose is ...to gather and disseminate information about and advocate positions of matters of public concern." Village of Schaumburg v. Citizens for a Better Environment, 444 U.S. 620, 635 (1980).

These nonprofit organizations are involved in extremely worthwhile causes, including very highly constitutionally-protected speech activities. Nevertheless, many state regulators have targeted these organizations for extremely detailed scrutiny, and cumbersome, costly regulations have been imposed on the organizations in many states. See Appendix A, discussed infra, at pp. 17-18. The New York statute at issue in this litigation whose fee of $20 on professional solicitors was increased to $80 in 1989 is just one example of the many state impediments set up in almost rapid-fire succession to the free speech activities of charitable organizations during the last decade. Unwarranted assumptions have often been the foundation for the excessive regulatory measures imposed by the states. See page 16, infra.

5. No one contests the state's right or duty to enact reasonable regulations to protect the health and safety of its citizens, but such regulations must observe the limits imposed by the Constitution. Thus, while anti-fraud and other proscriptive legislation addressing specific conduct could be entirely appropriate in certain cases, the imposition of fees and registration requirements on entire industries, regardless of conduct, might not be. The reviewing court, it is submitted, must ask whether, in the face of state-created burdens on the nonprofit organizations' First Amendment rights, the statute imposing those burdens is the least restrictive means of accomplishing the goal of protecting the citizenry. Thus, it is fair even to question the necessity for any taxation of charitable organizations and professional solicitors where existing federal and state law already adequately address that legislative goal of protecting the citizenry.

6. Nonprofit fundraising, far from deserving such disapprobation, is an integral part of the exempt and beneficial purposes of most charitable organizations, for it allows the organization to carry out its worthwhile purposes, and in the process disseminates ideas and information to the public. See Riley, supra, 487 U.S. at 797-98. As Justice White pointed out in Schaumburg, supra:

solicitation is characteristically intertwined with informative and perhaps persuasive speech seeking support for particular causes or for particular views on economic, political, or social issues, and for the reality that without solicitation the flow of such information and advocacy would likely cease. [444 U.S. at 632]

The fundraising activity of charitable organizations, therefore, is not conduct deserving constraint, but rather praise. Without it, many of our citizen causes would dry up, and much free speech would simply cease. Nevertheless, not only the states, but even private, quasi-regulators seem oblivious to the harmful effects of their regulatory excesses. See Cook, Assault on Freedom, The Philanthropy Monthly, May 1994, page 15.

7. As noted in Appendix A, the chart is published by the American Association of Fund-Raising Counsel, Inc. ("AAFRC"), and is republished in this brief with permission. The republishing of such information does not necessarily reflect any position of the AAFRC with respect to the issues addressed in this brief.

8. Appendix A lists potential fees in five states alone (Maryland, New York, Pennsylvania, Tennessee, and Virginia) of approximately $2,500. The chart (Appendix A) does not list all of the requirements or burdens imposed on charitable organizations by state, county, and city laws.

9. Such considerations of cumulative effect are also relevant to the Due Process Clause/Commerce Clause arguments mentioned above. As the Supreme Court said, in striking down Illinois' use tax upon a mail order seller in National Bellas Hess, supra:

For if the power of Illinois to impose use tax burdens upon National were upheld, the resulting impediments upon the free conduct of its interstate business would be neither imaginary nor remote. For if Illnois can impose such burdens, so can ever other State, and so, indeed, can every municipality, every school district, and every other political subdivision throughout the Nation with power to impose sales and use taxes. [Id., 386 U.S., at 753, emphasis added.]

10. There could be no effective scrutiny of the State's authority to hire numerous enforcement personnel and conduct unlimited investigations. The citizenry would have no effective control over such costs, nor, obviously, over whatever license/permit fees the State wished to charge to recover those costs. Indeed, that scenario is not far removed from the view of the law the Defendants-Appellees have urged in their brief regarding the current situation in New York.

11. Obviously, on this point the State would have had a much stronger argument that the $20 registration fee that was imposed prior to 1989 was the type of nominal fee that could possibly pass constitutional muster. There has been no credible argument advanced by the Defendants-Appellees that would justify the increase to $80. It appears to have been a revenue-raising device, pure and simple.

12. It should be noted that the district court's opinion in Streich, insofar as it sustained the Pennsylvania statute's limitation on permissible administrative expenses, clearly was in error. See Munson, supra. The statute was apparently repealed after the Supreme Court's decision in Munson.

13. Indeed, as pointed out by the appellants (Reply Brief, pp. 4-5), a similar license fee was later held by a different Tennessee federal court to be unconstitutional in Ellwest Stereo Theater, Inc. v. Boner 718 F. Supp. 1553, 1574-75 (M.D. Tenn. 1989), precisely because the fee was apparently based upon costs incurred for investigations by agencies and not merely upon costs involved in issuing the permit.

14. Obviously, charging the costs of monitoring or safety inspections of free speech activities is quite different from assessing a fee based upon the entire cost of law enforcement activity. The issue of whether the fee for a permit can be based upon compliance costs associated with that particular permit, discussed in Broadway Books, supra, and Mobile Sign, supra, is not precisely the issue in this case, just as the "parade permit" issue presented in Cox v. New Hampshire, 312 U.S. 569 (1941), and its progeny, and discussed below, may be considered slightly different from the "pure" free speech question presented in this case. Here, as opposed to these safety and parade cases, the state does not argue that the cost of any particular permit would justify the imposition of the professional solicitor's fee. Instead it maintains that the professional solicitor's fee is justified because of the cost of maintaining the entire investigative/enforcement system related to New York's charitable solicitation law. And that, under any of the cases referenced above, should be considered a violation of plaintiffs' First Amendment rights.

15. The district court in the instant case avoided the clear holding of ECCAG and purported to rely upon the earlier (1973) decision of this Court in U.S. Labor Party v. Codd. As explained above (p. 28), however, even Codd supports the Plaintiffs-Appellants' position, because the administrative fee upheld in that case was related to the costs of issuing the permit.