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Ninth Circuit Upholds Constitutionality of Hawaii Pay-to-Play Ban

As we advised back in 2010, Hawaii is among an ever-expanding list of states which have seen their pay-to-play laws challenged on constitutional grounds. Just this week, however, the United States Court of Appeals for the Ninth Circuit dismissed those concerns.  At issue was Hawaii’s prohibition against campaign contributions by government contractors until “completion of the contract.” In challenging the law, the plaintiffs’ complaint highlighted a little-discussed, unintended consequence of such laws that result in exorbitant expenditures of compliance time and resources (mostly in the form of legal fees): “Hawaii’s ban on candidate and non-candidate committees receiving contributions from government contractors means [contractors] must constantly keep track not only of whether it has government-construction jobs but also of whether a single . . . service technician is somewhere providing some minor service on a previous . . . job”. Complaint, p. 10-11.  The law, however, is premised on the need to prevent bribery or “quid pro quo” corruption regardless of the burden it places on the regulated.

Back in 2010 we wrote:

Bribery laws may be “fundamental to prevent corruption in government”
— even narrowly tailored prohibitions against contractor contributions to politicians with authority to award future contracts may be “fundamental to prevent corruption in government” — but Hawaii’s law in its current incarnation may be a Bridge Too Far to make such a claim.

Then again, no president has ever seen fit to nominate me to serve on the Ninth Circuit either. Those who have received such a nomination did not see it the same way.

In its 58-page order, the Ninth Circuit found that Hawaii’s contractor-contribution ban is an important and constitutional government tool to combat “quid pro quo corruption” and “serves sufficiently important governmental interests by combating both actual and the appearance of quid pro quo corruption”:

And as in Connecticut, Hawaii’s decision to adopt an outright ban rather than mere restrictions on how much contractors could contribute was justified in light of past “pay to play” scandals and the widespread appearance of corruption that existed at the time of the legislature’s actions. See Yamada III, 872 F. Supp. 2d at1058–59 nn. 26–27 (summarizing the evidence of past scandals and the perception of corruption). Thus, as a general matter, Hawaii’s ban on contributions by government contractors satisfies closely drawn scrutiny.

A-1’s narrower argument that the contractor contribution ban is unconstitutional as applied to its contributions to lawmakers and candidates who neither award nor oversee its contracts is also without merit. Hawaii’s interest in preventing actual or the appearance of quid pro quo corruption is no less potent as applied to A-1’s proposed contributions because the Hawaii legislature as a whole considers all bills concerning procurement. Thus, although an individual legislator may not be closely involved in awarding or overseeing a particular contract, state money can be spent only with an appropriation by the entire legislature.  See Haw. Const. art. VII, §§ 5, 9. Hawaii reasonably concluded that contributions to any legislator could give rise to the appearance of corruption.

Yamada v. Snipes, 1:10-cv-00497-JMS-RLP (9th Cir. 2015), slip op. 49-50 (link to this blog’s past post on Connecticut ruling added – unfortunately).

The court also upheld the state’s law requiring political action committees to register with the state after spending more than $1,000 to influence an election, something officials said is necessary to follow the money during campaign season.

The Ninth Circuit and the US Supreme Court—as currently constituted—don’t always read the First Amendment the same way when it comes to government regulation.  This round, however, without a doubt, has gone to the regulators.

Ninth Circuit Upholds Constitutionality of Hawaii Pay-to-Play Ban

Honolulu Update: Cayetano in a Run-Off and Pay-to-Play Still an Issue

Updating our last post, former HI Governor Ben Cayetano advanced to a run-off election in the race for Honolulu mayor over the weekend. His opponents, particularly the Hawaii Carpenters Union (operating under the nom de guerre Pacific Resource Partnership), continue to use then-Governor Cayetano’s veto of proposed pay-to-play legislation as a wedge issue.

Recently, the Pacific Resource Partnership has been circulating this petition against pay-to-play practices in general – and Cayetano in particular – to its followers.

All of this has caused the otherwise mild-mannered Cayetano to question the motivations of his accusers with this hard-hitting radio spot:

http://w.soundcloud.com/player/?url=http%3A%2F%2Fapi.soundcloud.com%2Ftracks%2F55350739&show_artwork=true

Stay tuned. The waters are not peaceful in “Mar Pacifico” and Election Day (November 6) is a long way off.

 

Honolulu Update: Cayetano in a Run-Off and Pay-to-Play Still an Issue

Pay-to-Play Legislation Takes Center Stage in Honolulu Mayoral Race

 

The phenomena of outside groups attacking a political opponent with thinly-veiled allegations that he is corrupt is certainly nothing new. Sliming one’s opponent over the airways with allegations that she awarded government contracts to unworthy major donors draws a collective yawn from our now-jaded electorate. What we are seeing in the Honolulu mayoral race right now, however, takes this phenomenon to a new level: mayoral candidate Ben Cayetano is currently under heavy fire for his position on pay-to-play legislation he vetoed as Governor back in 2002.

To hear the story told on Honolulu’s airwaves, the attacks sound familiar and can be heard here. 

http://w.soundcloud.com/player/?url=http%3A%2F%2Fapi.soundcloud.com%2Ftracks%2F52665900&show_artwork=true

The reality is more subtle (shockingly) than as portrayed in this ad and highlights an emerging political risk for legislators and chief executives as they seek to strike the proper balance between public corruption and harmful over-regulation of the public procurement process. An angry public wants absolute transparency and prohibitions against government contractor contributions. Responsible legislators on the other hand, also see the need to ensure that the law-abiding 99% operates within an environment free of legislation that does not impose unworkable restrictions or unintended consequences.

Honolulu’s race highlights the risks involved. In recent political advertising against Cayetano, the Pacific Resource Partnership, cited “insiders” who “revealed” that Governor Cayetano had been squishy soft on curbing pay-to-play while in office. As reported by the Hawaii Reporter, these insiders alleged (in part):

“Pay-to-play is real and has been part of Hawaii’s political culture for decades. I know because I am a retired engineer who managed the Hawaii businesses of two different engineering companies. Few bothered to challenge the awarding of contracts to those who “paid to play” because speaking out would guarantee no future work on government projects.

“In 2002, the Legislature passed a bill to ban direct political contributions from government contractors and corporations to county and state elected officials who issue contracts. It was vetoed [by then-Gov. Ben Cayetano], even though supporters said it was the most significant campaign finance reform bill in decades. … The ban would have been a good first step, but the veto stopped any chance to weaken the pay-to-play culture. …

As long as elected officials permit their campaign contributors to exercise influence, the “pay-to-play” system will continue. I hope the people will finally wake up and refuse to elect such officials. We don’t need “pay-to-play” in Hawaii.”

 Strong stuff, and a powerful populist message that has gained traction in campaigns and state legislatures across the country. In reality, however, if one gets in our “way-back” machine to 2002, then-Governor Cayetano actually announced he was vetoing the legislation in question because the State’s legislators had exempted themselves from its provisions banning contributions from government contractors! (As a side note, the Pacific Resource Partnership behind that negative advertising may have some “essplaining” to do of its own before the Hawaii Campaign Spending Commission).

Unfortunately, the toll of such rough and tumble attacks are more than theoretical. Unworkable legislation can make its way onto the books due to misplaced public pressure. The toll can also be personal. This week, mayoral candidate Ben Cayetano was admitted to Queen’s Medical Center in Honolulu with a bleeding ulcer which his wife attributed, in part, to the wave of negative advertising against him.

We wish you a speedy recovery Governor Cayetano and are submitting a travel request for a visit today.

 

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Pay-to-Play Legislation Takes Center Stage in Honolulu Mayoral Race

Hawaii Faces Constitutional Challenge

Hawaii has joined an ever-expanding list of states which have seen their pay-to-play laws challenged on constitutional grounds. The tension between public (and political) desire for transparency versus freedoms of speech and association has been exacerbated by the recent popularity of expanded pay-to-play legislation. Recent decisions have come down both on the side of those favoring increased disclosure and regulation and on the side of those challenging the laws as impermissible intrusions on personal liberties. With the recent filing of a legal challenge by famed first amendment attorney James “Jim” Bopp, Hawaii will have its hands full in preserving its pay-to-play law in its present incarnation.

At issue is Hawaii’s prohibition against campaign contributions by government contractors until “completion of the contract”. In challenging the law, the Bopp plaintiffs highlight in their complaint a little-discussed, unintended consequence of such laws that result in exorbitant expenditures of compliance time and resources (mostly in the form of legal fees): “Hawaii’s ban on candidate and noncandidate committees receiving contributions from government contractors means [contractors] must constantly keep track not only of whether it has government-construction jobs but also of whether a single . . . service technician is somewhere providing some minor service on a previous . . . job”. Complaint, p. 10-11.

The battle between regulation, practical reality and freedom of speech is thus joined.

Because Hawaii’s pay-to-play law does not limit itself, as many such state laws do, to prohibition against contribution politicians with authority to determine who receives government contracts, Jim Bopp argues that the law unreasonably impairs speech in pursuit of regulation:

Whatever the merits of banning government contractors’ contributions to candidates or officeholders who decide whether the contractors receive contracts or oversee the contracts, government has no compelling or sufficiently important interest in banning such contributions when the candidates or office holders do not decide whether the contractors receive contracts and do not oversee contracts. Id. at 48 (citations omitted).

The logic and legal foundation for such an argument would appear sound. Whether the federal district and appellate courts will agree with that logic and application of legal principle will remain to be seen. Immediate opposition to the litigation, however, such as this editorial by the Honolulu Star Advertiser editorial board, the appears content to disregard any such subtlety in declaring flatly that “direct contributions to candidates by government contractors certainly do give rise to corruption, which is why Hawaii prohibits ‘pay to play’ contributions to candidates by government contractors.”

Similar opposition by various other groups has also been reported in the media:

[O]pen-government groups — Common Cause Hawaii, the League of Women Voters of Hawaii, Americans for Democratic Action/Hawaii and Voter Owned Hawaii — said Bopp’s intent is to dismantle campaign finance regulations nationwide.
. . .
“Citizens in Hawaii and across the country support strong pay-to-play laws. Our pay-to-play law was strongly supported by the people of Hawaii when it was first passed, and again when there were attempts later to water it down,” Jean Aoki of the League of Women Voters of Hawaii said in a statement. “We know there is something rotten when you mix campaign donations and government contracts. Pay-to-play restrictions are fundamental to prevent corruption in government.”

Bribery laws may be “fundamental to prevent corruption in government” — even narrowly tailored prohibitions against contractor contributions to politicians with authority to award future contracts may be “fundamental to prevent corruption in government” — but Hawaii’s law in its current incarnation may be a Bridge Too Far to make such a claim.

Hawaii Faces Constitutional Challenge