Agency for International Development v. Alliance for Open Society International Inc., No. 12-10; U.S. Supreme Court; opinion by Roberts, C.J.; dissent by Scalia, J.; decided June 20, 2013. On certiorari to the U.S. Court of Appeals for the Second Circuit.

In the U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003, 22 U.S.C. § 7601 et seq., Congress has authorized the appropriation of billions of dollars to fund efforts by nongovernmental organizations to combat HIV/AIDS worldwide. The act imposes two related conditions: (1) No funds "may be used to promote or advocate the legalization or practice of prostitution," § 7631(e); and (2) no funds may be used by an organization "that does not have a policy explicitly opposing prostitution," § 7631(f). To enforce the second condition, known as the policy requirement, the Department of Health and Human Services (HHS) and the U.S. Agency for International Development (USAID) require funding recipients to agree in their award documents that they oppose prostitution.

Respondents, recipients of Leadership Act funds who wish to remain neutral on prostitution, sought a declaratory judgment that the policy requirement violates their First Amendment rights. The district court issued a preliminary injunction, barring the government from cutting off respondents' Leadership Act funding during the litigation or from otherwise taking action based on their privately funded speech. The Second Circuit affirmed, concluding that the policy requirement, as implemented by the agencies, violated respondents' freedom of speech.

Held: The policy requirement violates the First Amendment by compelling as a condition of federal funding the affirmation of a belief that by its nature cannot be confined within the scope of the government program. Pp. 6-15.

(a) The policy requirement mandates that recipients of federal funds explicitly agree with the government's policy to oppose prostitution. The First Amendment, however, "prohibits the government from telling people what they must say." Rumsfeld v. Forum for Academic and Institutional Rights Inc., 547 U.S. 47, 61. As a direct regulation, the policy requirement would plainly violate the First Amendment. The question is whether the government may nonetheless impose that requirement as a condition of federal funding. Pp. 6-7.

(b) The Spending Clause grants Congress broad discretion to fund private programs or activities for the "general Welfare," Art. I, § 8, cl. 1, including authority to impose limits on the use of such funds to ensure they are used in the manner Congress intends. Rust v. Sullivan, 500 U.S. 173, 195, n. 4. As a general matter, if a party objects to those limits, its recourse is to decline the funds. In some cases, however, a funding condition can result in an unconstitutional burden on First Amendment rights. The distinction that has emerged from this court's cases is between conditions that define the limits of the government spending program — those that specify the activities Congress wants to subsidize — and conditions that seek to leverage funding to regulate speech outside the contours of the federal program itself.

Rust illustrates the distinction. In that case, the court considered Title X of the Public Health Service Act, which authorized grants to health-care organizations offering family planning services, but prohibited federal funds from being "used in programs where abortion is a method of family planning." See 500 U.S. at 178. To enforce the provision, HHS regulations barred Title X projects from advocating abortion and required grantees to keep their Title X projects separate from their other projects. The regulations were valid, the court explained, because they governed only the scope of the grantee's Title X projects, leaving the grantee free to engage in abortion advocacy through programs that were independent from its Title X projects. Because the regulations did not prohibit speech "outside the scope of the federally funded program," they did not run a foul of the First Amendment. Id. at 197. Pp. 7-11.

(c) The distinction between conditions that define a federal program and those that reach outside it is not always self-evident, but the court is confident that the policy requirement falls on the unconstitutional side of the line. To begin, the Leadership Act's other funding condition, which prohibits Leadership Act funds from being used "to promote or advocate the legalization or practice of prostitution or sex trafficking," § 7631(e), ensures that federal funds will not be used for prohibited purposes. The policy requirement thus must be doing something more — and it is. By demanding that funding recipients adopt and espouse, as their own, the government's view on an issue of public concern, the policy requirement by its very nature affects "protected conduct outside the scope of the federally funded program." Rust, 500 U.S. at 197. A recipient cannot avow the belief dictated by the condition when spending Leadership Act funds, and assert a contrary belief when participating in activities on its own time and dime.

The government suggests that if funding recipients could promote or condone prostitution using private funds, "it would undermine the government's program and confuse its message opposing prostitution." Brief for Petitioners 37. But the policy requirement goes beyond preventing recipients from using private funds in a way that would undermine the federal program. It requires them to pledge allegiance to the government's policy of eradicating prostitution. That condition on funding violates the First Amendment. Pp. 11-15.

651 F.3d 218, affirmed.

Kagan, J., took no part in the consideration or decision of the case.