Excerpts From Remarks of Randolph W. Thrower (Prepared for delivery before the Institute of Continuing Legal Education in Georgia, Atlanta, Ga., Oct. 16, 1970) PUBLIC INTEREST LAW FIRMS Perhaps you would be interested in a comment on something new under the sun in the exempt organization area; namely, what has been called the public interest law firm. Only last week, we invited interested groups to give us the benefit of their views and recommendations with respect to this type of organization, which seems to be proliferating rapidly. But what, exactly, is a public interest law firm? Such a group may be organized to stimulate, initiate, finance, and handle litigation "in the public interest" in some designated field such as the environment, or consumer protection, or some other chosen area. These organizations assert that litigation initiated or handled by them will be "in the public interest," and charitable, even though property rights of private persons or corporations may be directly involvedand suits may be by one individual or private corporation against another. If the organization is entitled to be classified as exclusively charitable then contributions to it are deductible. The proposals which have been made to us regarding the public interest law firms have been viewed by us as having the potential for opening up a vast new area of activity which could be termed charitable, and thus have the benefit of deductibility of contributions. We have not prejudged the issue, but we do feel very definitely that all of its implications should be carefully reviewed, and that there should be a clear understanding on our part and also on the part of any approved organizations, of the implications of this, and any limitations that need to be imposed. We have had safeguards suggested from a number of different sources which differ in some very important respects one from another, and of course this requires attention. Interest in litigation of the sort expressed by these organizations may not be unlike that expressed on many occasions over the years by community associations or civic groups; which have undertaken to engage in litigation over matters affecting the community, such as actions which might involve the location of apartment buildings, bridges, churches, dams, factories and the like. No one would deny that there is a public interest in such activity, but it has not been reorganized as being exclusively charitable. On the other hand, we recognize that today our communities or regions may have before them vast projects involving great corporate interest and big government, where it may be difficult for an independent voice to be heard from the public without some body of legal expertise and financial support as is entailed in these proposals. Informed people actively concerned with protecting the environment have as 52-093-70- 2 sured us that this kind of institutionalized advocacy fills an important need and has already made valuable contributions in the public interest. Nevertheless, where tremendous private interests are involved, and often are in conflict, the possibility of abuse is great. Likewise, there is difficulty in determining that action on one side or the other can be deemed exclusively charitable. Indeed, should we approve a widespread entry into the charitable field by numerous legal groups, litigating broadly in the "public interest" as they see it without safeguards, there very possibly would come a reaction within a time, which would greatly prejudice those that might well be operating wholly and exclusively as charity. Probably nothing could be more damaging to the interests of the conservationists than for us to approve proposals that might lead to abuses, which in time might damage the cause of all. Knowledgeable people with whom I have discussed this, that is representatives of interested foundations, and lawyers who are familiar with or connected with these proposed law groups, recognize the fact that this does present novel questions which need to be resolved. Most have recognized that we have a problem of defining what is "charity" as it relates to this, and this is what we are now undertaking to do and I trust that it can be accomplished without loss of time and well within the 60 days indicated. In the meantime, we are assuring organizations of this sort currently having favorable rulings, and having financial supporters, that the deductibility of contributions to maintain current programs and current operating expenses can be made without concern over loss of deductibility. In fairness to those organizations that are now awaiting decision, and have not been favorably ruled upon, we think it would be appropriate for major grants to be withheld pending this study. If this were not done, there would be obvious discrimination arising from the delay caused by our desire to have this subject explored in a thorough and responsible way. EXECUTIVE OFFICE OF THE PRESIDENT, Washington, D.C., September 30, 1970. DEAR COMMISSIONER THROWER: I have been advised by our General Counsel Mr. Atkeson of the analysis you are making of the eligibility under section 501 (c) (3) of the code of entities which may pursue environment protection goals through litigation. It is my understanding that it would be helpful to you and your General Counsel Mr. Worthy if we were to set out the relevant public policy considerations as they appear to our Council. In our view, and in the view of our Legal Advisory Committee, Private litigation before courts and administrative agencies has been and will continue to be an important environmental protection technique supplementing and reinforcing Government environmental protection programs. I enclose a memorandum setting out at greater length the reasons for our view, some of the precedents and the safeguards you would wish to consider. We have observed that litigation brought by private groups which must rely on contributions for their support have performed at least three key functions in aid of our environment protection programs: They have strengthened and accelerated the process of enforcement of antipollution laws, They have identified gaps in our regulatory procedures as for example in our pesticide controls and spurred action to remedy these gaps, and They have brought before the courts the public's interest in enforcement of such new governmental procedures as the section 102 environmental impact statement requirement. None of these cases is of a type that would bring an award of damages to the plaintiff and these cases typically do not involve an economic interest of the plaintiff that would finance the cost of litigation. In other words, if it were not for the plaintiffs' concern for the protection of our collective environment, and the availability of contributions which receive charitable contribution status under our tax laws to support the costs of litigation, this important private supplement to our governmental efforts would be seriously curtailed. I would be happy to discuss the matter with you at your convenience. I have asked Mr. Atkeson to call Mr. Worthy since I understand you are trying to reach an early decision. Sincerely, (5) RUSSELL E. TRAIN, Chairman. EXECUTIVE OFFICE OF THE PRESIDENT, Washington, D.C., September 25, 1970. CHARITABLE STATUS OF PRIVATE LITIGATION TO PROTECT THE I. THE IMPORTANCE OF PRIVATE ENVIRONMENTAL LITIGATION A. Recognition by Government officials On February 10, 1970, in his message to Congress on the environment, President Nixon called for "greater citizen involvement" in the "fight against pollution." The President observed that "[t]he tasks that need doing require money, resolve, and ingenuity-and they are too big to be done by Government alone." Id. The President's concern to obtain greater citizen involvement in our pollution control effort was reflected in the First Annual Report of the Council on Environmental Quality. The Council expressed the view that existing enforcement of Federal water and air pollution laws had not reached its full potential. Report, at 53. The Council made special mention of supplementary efforts of citizen groups to take actions to restore or prevent damage to the environment, citing among other examples instances where citizens had sought and obtained redress through the judicial system. Id., at 218. On this specific issue, the Council's Legal Advisory Committee has adopted a resolution stating as the sense of the Advisory Committee that Private litigation before courts and administrative agencies has been and will continue to be an important environmental protection technique supplementing and reinforcing governmental environmental protection programs. B. Statutory recognition A number of Federal statutes recognize citizen participation in environmental litigation. The policy declaration of the National Environmental Policy Act (NEPA) states that the Congress. . . declares that it is the continuing policy of Section 102(2) (C) of NEPA, 42 U.S.C. and 4332 (2) (C), also requires that copies of the environmental impact statements required by the act, along with the comments of governmental agencies, "shall be made available to the President, the Council on Environmental Quality and to the public as provided by section 552 of title 5. . . .” [Emphasis supplied.] Courts have recognized a private right to enforce the environmental impact statement requirement of NEPA. In Wilderness Society v. Hickel, 1 Env. Rep. 1335 (D.C.D.C., decided Apr. 23, 1970), at the request of private groups a Federal district court stayed construction of an access road for the proposed Trans-Alaska Pipeline System because, among other things, the Department of Interior had not fully complied with NEPA. Citizen participation is recognized in another antipollution law, the River and Harbors Act of 1899. One of its provisions (33 U.S.C. and 407), known as the Refuse Act, regulates the "deposit [of] any ... refuse matter of any kind or description whatever . . . into any navigable waters of the United States." Violations of the Refuse Act are subject to fines and imprisonment (33 U.S.C. sec. 411). Section 411 allows the court, in its discretion to direct that "one-half of said fine be paid to the person or persons giving information which shall lead to conviction." Several private groups have received this informer's bounty where Government action has been successful. Both of the foregoing examples demonstrate that private plaintiffs can serve "as private Attorney Generals' to protect the public interest." Citizens Committee for the Hudson Valley v. Volpe, 452 F. 2d 97 (2d Cir., 1970) [No. 5 34010 et. al., decided Apr. 16, 1970]. In recent decisions such as Association of Processing Service Organizations v. Camp, 397 U.S. 150 (1970), and Barlow v Collins, 397 U.S. 159 (1970), the Supreme Court has eliminated certain restrictions on the standing of private persons to bring suits challenging Federal administrative action, finding value in the ability of private groups to represent interests and concerns recognized by pertinent statutes. Similar considerations appear to be incorporated in the air pollution bill passed by the Senate and sent to a conference committee. That bill authorizes citizen suits to enforce standards set by the act "against any person, including, but not limited to, a governmental instrumentality or agency. . . ." S. 4358, 91st Congress, second session (reprinted at 116 Cong. Rec. S. 15797). The Council's Legal Advisory Committee has expressed its approval of citizen-suit provisions of this general type. II. SECTION 501(C)(3) STATUS OF ENVIRONMENTAL LITIGATION Most of the environmental cases previously described do not involve an economic interest of the plaintiff that would finance the cost of litigation. Having private organizations with an appropriate environmental interest and with an ability to litigate environment protection cases supplements governmental efforts and helps fill gaps in the Government's programs. Some organizations, such as Friends of Earth, have been organized to operate without tax-exempt status, presumably to avoid the limitations placed on their legislative activities by such status. However, the worthwhile objectives of private environmental litigation are not likely to be met by taxable groups alone. It is necessary to have organizations capable of receiving contributions which have charitable contribution status under our tax laws if the interests of our environmental programs are to be fully represented. A. Present analogies Well-established groups enjoying tax-exempt status have long filled the role of private attorneys general in areas of the law other than environment protection. The Internal Revenue Service has granted section 501(c)(3) tax-exempt status to legal aid societies, the NAACP legal defense fund, and the litigating arm of the ACLU. These organizations have brought and have supported a wide spectrum of actions against governmental and private groups involving both constitutional and nonconstitutional issues. The crucial consideration appears to be whether the benefits flowing from litigation inhere primarily and principally to the general public, rather than to private interests. |