Despite a major legal setback, the National Association of Manufacturers is forging ahead with its challenge to a piece of the new lobbying law that it says violates its First Amendment rights by forcing disclosure of its members.

The trade group’s effort was dealt a serious blow Friday when U.S. District Judge Colleen Kollar-Kotelly dismissed NAM’s suit.

But NAM officials on Monday said they will appeal. Meanwhile, they are seeking a temporary injunction against enforcement of the provision in question.

The clock is ticking: The first quarterly reports, which will include the disclosures NAM is resisting, are due Monday. That means if the group fails to secure a stopgap hold on the provision, it will face either revealing members that it says will leave the association as a result, or bucking the law and risking criminal prosecution.

“We would just as soon avoid that,” Quentin Riegel, NAM’s vice president for litigation, said of willfully violating the law.

Still, he said, the group has not yet decided what it will do if the court declines to step in.

NAM is fighting a little-noticed piece of the Honest Leadership and Open Government Act — the landmark lobbying and ethics reform legislation enacted last year — that was designed to shine new light on stealth coalitions. Those organizations, often with innocuous-sounding names, have sprung up in increasing frequency in recent years to lobby on the most contentious issues before Congress, while refusing to name their financial backers.

Under the provision, the groups would be required to list anyone contributing at least $5,000 a quarter and actively participating in shaping strategy.

While earlier versions of the measure exempted trade associations and other tax- exempt groups, the language of the final reform bill did not — a fact NAM noted in its suit.

But in her ruling, Judge Colleen Kollar-Kotelly pointed out that the Jack Abramoff scandal that first prompted the reform drive in Congress involved the abuse of established tax-exempt entities. Using the strictest standard of legal scrutiny for a possible First Amendment violation, she said the provision “is narrowly tailored to serve compelling government interests, and is neither vague on its face nor as applied to the NAM.”

In a statement, NAM president John Engler said, “We remain convinced that many of the law’s burdensome and intrusive disclosure requirements will have a serious chilling effect on the Constitutional rights of our members. Public debate is not served by undermining the rights of business –– employers and employees alike –– or when laws limit speech, association and the public’s ability to petition the government.”

The lawsuit targets a narrow provision of the law. But it also challenges as “unconstitutionally vague” the broader bill’s definition of lobbying activities — a definition that undergirds all the disclosure requirements in the law, said Democracy 21 President Fred Wertheimer, whose group filed an opposing brief in the suit.

“That’s central not just to the provision covering NAM and others, but to the overall disclosure requirements applied to lobbyists and lobbying organizations,” Wertheimer said. “And in rejecting a challenge to that, the court was rejecting a challenge to a central provision of the law.”

It’s not yet clear how far NAM could take its appeal. The United States Supreme Court has not weighed in on the First Amendment implications of federal lobbying disclosure rules since 1954, in U.S. v. Harriss, when it upheld the constitutionality of an early federal lobbying law, the Regulation of Lobbying Act of 1946.

Federal courts have issued several rulings since on state lobbying laws, mostly upholding their constitutionality, a fact reform advocates said bodes well for their effort to block NAM’s challenge.

Brett Kappel, a campaign and lobbying law expert, predicted NAM would have a tough time winning an injunction against enforcement of the law. “If [Judge Kollar-Kotelly] denies a stay, to get one from the appeals court, NAM would have to demonstrate a likelihood of success on appeal,” he said. “And she wrote an extensive and well-sourced decision that utilized the highest standard of review possible in evaluating the constitutionality of [the provision], both of which makes it unlikely an appeals court will overturn her decision.”

NAM so far has earned little support from fellow trade associations in its effort. The U.S. Chamber of Commerce, which did not even file a brief in support of NAM, did not return a request for comment on the decision.

Jim Clarke, top lobbyist for the American Society of Association Executives, said his group was still studying the decision.