Greenpeace calls the $660 million verdict a jury delivered against it for orchestrating violent protests at a North Dakota pipeline a threat to “our rights to peaceful protest and free speech.” But one of the biggest threats may be to its status as a tax-exempt public interest group.
Nonprofits can retain their exemption from federal income taxes only if they restrict themselves to activities that conform to Internal Revenue Service rules. Breaking the law isn’t one of those activities. Do it enough, and the IRS can yank an organization’s tax-exempt status, as critics including U.S. Rep. Jason Smith have called for.
“Everyone has the right to protest, but if it leads to violence and destruction, you must be held accountable,” the Missouri Republican said in a recent post on X.
The big question for Greenpeace is: How much lawbreaking is too much?
“If I wear a Greenpeace T-shirt and I broke the law, Greenpeace isn’t necessarily responsible,” said Lloyd Hitoshi Mayer, a First Amendment expert at Notre Dame Law School. “They have to have encouraged me, or directed me to break the law.”
Unfortunately for Greenpeace, Energy Transfer convinced a jury the environmental group did just that in a trial that ended in March. The jury heard evidence Greenpeace issued a $21,000 “rapid response” grant to send trainers to the pipeline site along with equipment including propane cannisters and 30 “dragon sleeves” to lock protesters to construction equipment.
Greenpeace also spent $10,000 to dispatch its “Rolling Sunlight” van to Standing Rock, where a Greenpeace employee said it was used for “some serious spy stuff” such as scouting locations to obstruct or damage the pipeline. One activist arrested for tying himself to Energy Transfer equipment allegedly bragged “Greenpeace gave me $90,000.”
Energy Transfer said the illegal and sometimes violent protests cost it hundreds of millions of dollars and the jury agreed, ordering Greenpeace USA entities to pay $660 million. Greenpeace has appealed, saying the judgment will force it into bankruptcy and represents an attack on its First Amendment right to engage in protest. It has also sued Energy Transfer in Europe under a law protecting speech by nongovernmental organizations.
“It’s easy to see how this win for Energy Transfer could chill speech and silence future protests before they even begin,” said Greenpeace Fund Interim Executive Director Sushma Raman in a recent op-ed.
There’s no question nonviolent protests are generally protected by the First Amendment. Even if an organization instructed Rosa Parks to break the law by sitting in the front of a bus, it is highly unlikely such a minor transgression would trigger an IRS review.
Organized, violent lawbreaking is another story. The U.S. Supreme Court set a lower standard in a 1983 decision stripping Bob Jones University of its IRS exemption for discriminating against minorities, including enforcing a ban on interracial dating.
The key principle – which Harvard University is facing right now over claims it failed to protect Jewish students from antisemitic protestors – is whether an organization is violating a "fundamental national public policy" and “overriding government interest.”
Breaking the law by definition is violating public policy, regardless of whether the protest is pursuing larger goals. But to endanger tax-exempt status, the lawbreaking must be significant in comparison with the group’s legitimate activities.
Much of the U.S. law in this area dates back to antiwar activists during the Vietnam War. But now it is environmental groups that are targeted for trespassing, sit-ins and other aggressive actions against companies they disagree with.
“If the whole purpose of a group is to promote civil disobedience, that’s not a charitable and not a social welfare group,” Prof. Mayer said. “But it’s rare for obvious reasons” for an organization to lose its tax-exempt status.
“You have to get over the attribution aspect as well as the amount of it,” he said.
With $40 million in annual revenue and a $660 million judgment against it, Greenpeace would seem to be in the danger zone. Greenpeace, of course, says its primary purpose is raising awareness about environmental threats to humanity.
But the more it appears to be aligned with protesters who cross the line into illegality, the more its tax-exempt status is in danger. (As a 501(c)4 social welfare organization, Greenpeace pays no taxes on its revenue but donations to it are not tax-deductible.)
New Zealand farmers are pressing a similar attack against Greenpeace for occupying an animal feed warehouse in Port Taranaki. Activists broke through security fences and placed a 70-meter banner reading "Anchor Rainforest Killer" on the roof because they believe palm kernel feed imported from Indonesia is leading to rainforest destruction. The protesters also stopped a ship from unloading 30,000 metric tons of palm kernel, which is used to feed dairy cows.
“If an organisation can occupy ports, threaten livelihoods, and deliberately mislead the public — all while claiming charitable status — then the system is clearly broken,” New Zealand Federated Farmers said in a news release.
The Trump Administration has plans to rescind Harvard's tax-exempt status and recently told the school that it should no longer apply for federal research grants, because the federal government will not provide them. Last month, though, the administration said there were no plans to review tax-exempt statuses of environmental groups, and Greenpeace recently staged a peaceful protest at one of Trump's golf courses in Scotland.