Expanding the Idaho Attorney General’s Investigatory Reach: The “Reason-to-Believe” Standard and Charitable-Asset Oversight after Children’s Home Society v. Labrador (Idaho 2025)

Introduction

The Supreme Court of Idaho’s decision in Children’s Home Society of Idaho v. Labrador, 171 Idaho ___ (2025) confronts the intersection of state oversight powers, federal pandemic relief funds, and constitutional protections. The case arose when Attorney General (AG) Raúl Labrador issued broad civil investigative demands (CIDs) to dozens of organisations that received “Community Partner Grant” money—federal American Rescue Plan Act (ARPA) funds channelled through the Idaho Department of Health & Welfare (IDHW) to offset COVID-19 learning loss. Allegations surfaced that some grantees diverted money to children under five, contrary to the Idaho Legislature’s express 5-to-13-year restriction.

Thirty-four nonprofits, school districts, counselling centres, and an individual, Elizabeth Oppenheimer, refused to comply and sought an injunction. The district court split the difference—quashing CIDs for 19 entities and enforcing them against 15. Both sides appealed. The Supreme Court’s opinion clarifies five pivotal issues:

ARPA grant money constitutes “charitable assets” governed by the Idaho Charitable Assets Protection Act (ICAPA) and the Idaho Charitable Solicitation Act (ICSA).
The AG may issue a CID whenever he has a “reason to believe” (i.e., reasonable suspicion, not probable cause) that any person may possess relevant information.
The “reason-to-believe” threshold authorises CIDs to non-suspect third parties.
The informer privilege under Idaho Rule of Evidence 509 allows in-camera review with redactions, satisfying due-process notice requirements.
CIDs that compel blanket disclosure of an individual’s associative ties violate the First Amendment freedom of association unless narrowly tailored.

Summary of the Judgment

Affirmed – ICAPA/ICSA apply; 15 recipients must comply with CIDs; no probable-cause requirement; no general due-process violation; in-camera procedure proper.
Reversed – District court’s injunction for 19 recipients; court used wrong legal test. Remanded to re-evaluate CIDs under correct “reason-to-believe” standard.
Partial Victory for Oppenheimer – Her CID’s demand for a list of all charitable affiliations is overly broad and infringes freedom of association; district court must modify or set aside.
No Attorney-Fees Award – Mixed result; parties acted with reasonable legal bases.

Analysis

1. Precedents Cited and Their Influence

Verska v. Saint Alphonsus – Reiterates textualism: courts follow unambiguous statutory language. Used to interpret ICAPA/ICSA definitions.
Edwards v. Idaho DOT – Legislative definitions control. Supports treating grantees as “persons” and “charitable organisations.”
State v. Bishop – Explains difference between reasonable suspicion and probable cause, guiding the “reason-to-believe” analysis.
Lunneborg v. My Fun Life – Articulates abuse-of-discretion standard, applied to evidentiary rulings.
U.S. Supreme Court administrative-subpoena trilogy:
See v. City of Seattle (1967), Donovan v. Lone Steer (1984), and United States v. Morton Salt (1950) – Establish that agency subpoenas require relevance, specificity, and reasonable scope—not probable cause.
Americans for Prosperity Foundation v. Bonta (2021) – “Exacting scrutiny” for compelled donor disclosures; used to find Oppenheimer’s CID overbroad.
Bolger v. Lance – Labels Idaho AG a “law-enforcement agency” for privilege purposes.
Hosey, Davila – Idaho informer-privilege application.
Classics: Bates, NAACP v. Alabama – Core freedom-of-association principles.

2. Court’s Legal Reasoning

a. Statutory Applicability of ICAPA & ICSA

ICAPA covers “any thing of value impressed with a charitable purpose.” The Court adopted an expansive view: legislative appropriations aimed at public education are still “charitable” because the funds further a community benefit. Parallel reasoning under ICSA treats grant applications as “charitable solicitations.” Thus, state funds do not lose their charitable character merely because they originate from government.

b. “Reason to Believe” ≠ Probable Cause

By tracing the 1993 amendment that replaced “probable cause” with “reason to believe,” the Court anchored its interpretation in legislative intent. Borrowing from Fourth-Amendment administrative-subpoena doctrine, it equated “reason to believe” with criminal-law “reasonable suspicion” and emphasised flexibility during early-stage civil investigations.

c. Scope of CIDs

Section 48-611 authorises demands on any person believed to have relevant information. The district court erred by requiring suspicion that the recipient violated the law. The Supreme Court clarified that third-party witnesses (including compliant grantees, contractors, or even record-keepers) fall within statutory reach.

d. Procedural & Due-Process Safeguards

Recipients may petition under §48-611(2) to extend, modify, or quash CIDs. The Court held this statutory mechanism, coupled with actual notice of requested documents, satisfies due-process notice and opportunity-to-be-heard requirements.

e. Informer Privilege & In-Camera Review

Applying Idaho Rule of Evidence 509(c), the Court upheld redaction of whistle-blower identities, stressing potential economic or retaliatory harm. Counsel had access to sanitized affidavits, preserving adversarial testing while protecting informers.

f. First Amendment Limits

The AG’s demand for a catalog of all organisations with which Oppenheimer is “member, director, volunteer, or donor” failed exacting scrutiny. It lacked tailoring—sweeping in churches, parent-teacher associations, or unaffiliated charities unrelated to ARPA grants. The Court remanded for modification or quashal, underscoring that investigative zeal must not chill associational privacy.

3. Impact on Future Litigation and Administration

Broadened Investigatory Powers. Idaho AGs—and potentially other state agencies adopting similar language—may now rely on a lenient reasonable-suspicion threshold when issuing subpoenas/CIDs, thereby streamlining oversight of fraud, waste, and abuse in public-fund programmes.
Government Grants as “Charitable Assets.” Non-profits and even school districts must treat state funds with the same fiduciary vigilance demanded of donor funds. Mis‐use exposes them to civil (and possible criminal) liability under ICAPA/ICSA.
Third-Party Exposure. Vendors, consultants, and individuals tangentially linked to a suspected violation can expect document demands. Counsel should audit record-retention policies and prepare privilege strategies.
First-Amendment Guardrails. Investigators must specifically link associative-information requests to suspected wrongdoing. Blanket donor/member disclosures remain vulnerable.
Guidance for Trial Courts. Decision sets a template: verify AG’s “reason-to-believe,” ensure CID relevance, balance First-Amendment concerns, and utilise redacted in-camera material when informer safety is at stake.

Complex Concepts Simplified

Civil Investigative Demand (CID): An administrative subpoena—no judge’s pre-approval required—ordering production of documents or testimony relevant to a civil investigation.
ICAPA vs. ICSA:
• ICAPA (2020) – Guards all “charitable assets” from misuse.
• ICSA (circa 1991) – Prevents deceptive charitable solicitations.
Both import enforcement mechanics from the Idaho Consumer Protection Act (ICPA) §48-611.
“Reason to Believe” Standard: Analogous to “reasonable suspicion” in criminal law; requires articulable facts suggesting potential wrongdoing—much lower than “probable cause.”
Informer Privilege (I.R.E. 509): Allows state agencies to shield identities of whistle-blowers or tipsters, subject to in-camera court review to verify relevance.
Exacting Scrutiny: Middle-tier First-Amendment review demanding a “substantial relation” between disclosure requirement and important governmental interest, with narrow tailoring.

Conclusion

Children’s Home Society v. Labrador reshapes Idaho’s regulatory landscape in three ways: it confirms that publicly funded grants can be policed under charitable-asset statutes; it cements a low “reason-to-believe” bar for investigative subpoenas; and it delineates constitutional outer limits safeguarding associational privacy. Organisations receiving or administering public funds—and their advisors—must now anticipate robust document-production demands and audit compliance proactively. Conversely, the ruling reinforces that investigatory breadth is not boundless: courts remain vigilant against fishing expeditions that chill First-Amendment freedoms. The decision therefore strikes a new equilibrium between governmental oversight and civil liberty, likely to influence statutory-subpoena practice well beyond Idaho’s borders.