* Divided panel rules requirement violates free speech
* Dissent asks U.S. Supreme Court to resolve issue
By Basil Katz
NEW YORK, July 6 (Reuters) - Groups fighting HIV/AIDS cannot be required to denounce prostitution as a condition of receiving funds from the U.S. government, an appeals court ruled on Wednesday.
A 2-to-1 decision by the 2nd U.S. Circuit Court of Appeals upheld a lower court injunction barring federal agencies from enforcing the mandate on grounds it violated free speech rights.
"Congress's spending power, while broad, is not unlimited, and other constitutional provisions may provide an independent bar to the conditional grant of federal funds," U.S. Circuit Judge Barrington Parker wrote in a decision joined by Judge Rosemary Pooler. Judge Chester Straub dissented.
"The government may not place a condition on the receipt of a benefit or subsidy that infringes upon the recipient's constitutionally protected rights," the ruling said.
The funds in question come from the United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003. The law said organizations that receive funds must have a policy "explicitly opposing prostitution."
In dissent, Straub called on the U.S. Supreme Court to take up the case to "set us straight" on possible unconstitutional conditions on government funding.
The case is Alliance for Open Society International, Inc, et al v. United States Agency for International Development et al, 2nd U.S. Circuit Court of Appeals, No.08-4917.
(Reporting by Basil Katz)
Our Standards: The Thomson Reuters Trust Principles.
