Our Lawsuit Over HB43 Settled: A Victory for Free Association in Utah

Last November, along with the Utah Taxpayers Association, we sued the state seeking to overturn a clearly unconstitutional law requiring disclosure of information about our donors. Today, due to the great work of attorneys from the Center for Competitive Politics, who represented our organizations in this lawsuit, we are happy to announce a settlement—and a victory for free association in Utah.

House Bill 43, passed by the legislature in 2013, was sponsored in response to a political consultant’s illegal use of non-profit organizations to hide the identity of the source of his donors—from the payday lending industry—to fund a negative campaign against Representative Brad Daw, who had sought to regulate the industry’s practices. The bill passed the Senate 20-8 and passed the House 60-13.

The law compels private non-profit organizations—such as Libertas Institute—to publicly disclose the personal information of their donors when the organization spends $750 or more on political activity in a single year. This creates a substantial chilling effect, harming our potential to raise funds from people who may not wish to be publicly identified with their ideological and financial support, whether for family, business, religious, or personal reasons.

An op-ed we co-authored with our co-plaintiff, published last year in the Salt Lake Tribune, explains our concerns with the law.

The lawsuit, filed against Lieutenant Governor Spencer Cox and Attorney General Sean Reyes, in their official capacities as enforcer and prosecutor of this law, is now settled. The state has agreed to the following:

  • The state will not enforce HB43 against non-profit organizations who engage “in constitutionally protected political advocacy and political issues advocacy,” recognizing that doing so would be “unconstitutional unless those organizations are political action committees or political issues committees for which such advocacy is their major purpose.” In other words, 501(c)3 nonprofits that engage in political advocacy on a limited, infrequent basis (as in our case) are exempt from prosecution.
  • Exempted organizations in Utah—not just our organizations as plaintiffs—will not be fined or criminally charged for failing to comply with the provisions of HB43.
  • By the end of 2016, the state’s publications, websites, and other information about disclosure requirements will be changed to not indicate in any way that exempted organizations are required to disclose the information required by HB43.
  • Past, current, or future violations of HB43 by our organizations will not be prosecuted.
  • The consent decree (settlement) is an enforceable contract that can be used by us or another organization in the future as may be necessary, should the state violate its agreement not to enforce the law.

We are happy with this outcome and look forward to working with the legislature to amend the law to reflect the settlement and the position taken by the defendants.