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Clifford Chance

Clifford Chance

Business & Human Rights Insights

USAID v. Alliance for Open Society International: The Intersection of Foreign Aid and Constitutional Protections

In a case affecting the free speech rights of NGOs, and questioning whether foreign entities have constitutional rights, the U.S. Supreme Court heard oral argument on the constitutionality of an HIV/AIDS funding condition.

In 2013, the U.S. Supreme Court held in USAID I that the First Amendment's freedom of speech guarantee prohibits the U.S. government from requiring U.S. recipients of federal HIV/AIDS prevention funds to adopt a policy opposing prostitution and sex trafficking. On May 5, 2020, the Supreme Court heard oral argument on whether the First Amendment bars imposing this condition on the foreign affiliates of the U.S. recipients. U.S. Agency for International Development v. Alliance for Open Society International (USAID II) (No. 19-177).

What Happened in USAID I?

At the turn of the 21st century the world was facing a public health crisis: HIV/AIDS had spread across the globe, infecting millions. In response, Congress enacted the United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003 (the "Act"), which provides funds to NGOs to combat the spread of HIV/AIDS. Identifying prostitution and sex trafficking as "causes and factors" in the spread of HIV/AIDS, the Act conditioned funding on NGOs having a policy "explicitly opposing" prostitution and sex trafficking (the "Policy Requirement").

It is well established that Congress may "impose limits on the use of [government] funds to ensure they are used in the manner Congress intends." But Congress may not impose a condition that unconstitutionally burdens First Amendment rights. In USAID I, the Supreme Court held that forcing U.S.-based NGOs to adopt these policies would unconstitutionally compel them to engage in government-required speech.

What's Different This Time?

In short: non-U.S. entities. After USAID I, U.S. NGOs argued that forcing their non-U.S. affiliates to adopt the U.S.-mandated policies also unconstitutionally burdened the U.S. NGOs' freedom of speech.

Why argue the case this way, rather than that the Policy Requirement violates the rights of the non-U.S. NGOs themselves? First, although not altogether free from doubt, it is hard to argue that non-U.S. entities have constitutional rights of their own. Second, the speech of non-U.S. NGOs is arguably attributable to the U.S. NGOs because they are one global organization. Picture a U.S.-based NGO that fights HIV/AIDs globally, but has to operate in certain countries using locally-incorporated affiliates. The NGOs contend that the public statements of the local affiliate cannot be separated from the U.S. affiliate. Moreover, if the local affiliates had to adopt a certain policy, while the U.S. affiliate did not, "inconsistent messaging" and "hypocrisy" would result, which according to the NGOs would undermine their "standing in the public-health community [and their] ability to raise private funds and to implement programs." Therefore, applying the Policy Requirement to the local affiliate would burden the rights of the U.S. affiliate.

The government responds that the foreign affiliates are legally distinct entities, and non-U.S. entities do not have First Amendment rights. Accordingly, Congress is free to impose the Policy Requirement on non-U.S. entities—just as its controversial "Mexico City Policy" bars non-U.S. recipients of family planning funds from promoting abortion (a condition that the lower courts have affirmed). The government warns that siding with the NGOs would "open the door to a potentially broad range of constitutional challenges" to U.S. funding decisions and hamper U.S. policy.

The lower courts agreed with the NGOs and held that the Policy Requirement could not be applied to the foreign entities. The Supreme Court will now decide that question.

Oral Argument

Although the Justices' questions at oral argument are not always a reliable outcome predictor, the tenor appeared to show two camps.

On one side were Justices who appeared to agree with the NGOs that the rationale of USAID I governs this case. Chief Justice Roberts (who wrote USAID I) and Justices Sotomayor and Breyer did not seem to accept the government's reliance on legal separation. In particular, the Chief Justice suggested that the U.S. NGOs have "practical control" of the foreign affiliates. Justice Sotomayor, who as an appellate court judge wrote a decision upholding the Mexico City Policy, made reference to other First Amendment precedent that ignored the corporate form—in particular, cases involving speech and religious restrictions that were unacceptable to conservatives, who typically are more accepting of government conditions placed on funding programs.

Some of the more conservative Justices seemed inclined to accept the government's argument out of concern about limiting the government's ability to promote its policies. Justices Alito and Kavanaugh raised several hypotheticals involving U.S. policy, including restrictions on campaign contributions by foreign entities, conditioning funds for the Middle East peace process on acknowledgement of Israel, and requiring schools to denounce terrorist attacks against civilians. A potentially deciding vote, Justice Thomas (who dissented in USAID I) suggested that nothing in USAID I requires invalidating the Policy Requirement with respect to foreign affiliates.

Justice Kavanaugh raised the question that the NGOs avoided in their brief, expressly asking whether unaffiliated foreign NGOs themselves have constitutional rights, and the NGOs conceded that they do not.

Conclusion

This case has garnered substantial attention, with numerous other NGOs, libertarian groups, and a coalition of members of Congress filing briefs in support of the NGOs' position. Nevertheless, the line-up of this Court puts the outcome in question. Only four of the Justices from the USAID I majority will decide this case (Justice Kagan is recused), and Justices Alito, Gorsuch, and Kavanaugh displayed hesitancy to accept the NGOs' position. One possibility, given Justice Thomas' dissent in USAID I, is that the Court will split 4-4—which would leave the lower court decision in favor of the NGOs in place.

The Supreme Court will issue a decision by the end of June.