Posted on November 24, 2010 by Amol Naik

"Pay-to-Play" Restrictions Debated in Newark: Unfair Advantage for Popular Mayor?

Critics of "pay-to-play" restrictions have long come from throughout the political spectrum, raising concerns ranging from free speech to ballot access. But the recent "pay-to-play" proposals in Newark, NJ have been criticized by some public officials for a rather novel reason: they can't pick up the phone and call Oprah for a contribution like their popular Mayor, Corey Booker, can.

While the proposed legislation in Newark is in its infancy and is likely to change, it appears to be aimed at limiting contributions from local redevelopment companies. Specifically, the Star Ledger reports that the legislation's current language, "would bar contributions to city candidates from redevelopers, their subcontractors and their consultants starting the moment there is interest in an area for redevelopment."

This concept is not a novel one, particularly in New Jersey, which has arguably the toughest "pay-to-play" laws in the country. In fact, numerous localities in New Jersey have similar laws on the books. And as we detailed previously, Governor Chris Christie has proposed a wave of robust reforms that would further regulate the political law environment in the Garden State.

What is unique here, however, are claims such as the ones contained in the Star Ledger article:

As "pay-to-play" legislation limiting campaign donations from local redevelopers wends its way through City Hall, some city leaders are saying the proposed fundraising restrictions would create an unfair playing field for candidates who don’t have Oprah Winfrey on speed dial.

"I am not a rock star councilwoman," said at large council member Mildred Crump this week. "We have a rock star mayor."

Indeed, candidates without nationwide networks would be more directly impacted by the current Newark "pay-to-play" proposals than a national figure like Mayor Booker. Yet another reason for some to dislike this sort of piecemeal "pay-to-play" regulation. Nonetheless, reports on the ground indicate that passage of some form of this legislation is likely.

In any case, New Jersey continues to be a focal point for developments in the "pay-to-play" arena. We will monitor such developments closely as the end of 2010 nears.

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Posted on July 21, 2010 by Stefan Passantino

Second Circuit Upholds Connecticut Pay-to-Play Law

In a much anticipated opinion (attached), the United States Court of Appeals for the Second Circuit has upheld significant portions of Connecticut’s pay-to-play law. Interestingly, while the Court upheld the state’s very strict prohibition against contractors from contributing to the campaigns of state candidates, it invalidated a similar provision as applied to state lobbyists. The opinion also rejected a provision of the law which prohibited contractors and lobbyists from soliciting campaign contributions from others.

The ruling is quite significant when one considers the breadth of the existing Connecticut law as compared with pay-to-play restrictions in other states. Like many states, lobbyists, state contractors and prospective state contractors are prohibited from making contributions to certain state candidates, candidate-affiliated political action committees and party committees. What makes the law noteworthy, and a special little compliance nightmare for those seeking to adhere to it, is that the solicitation restrictions apply not just to principals of state contractors, but also to their families.

In upholding the portion of the law pertaining to contributions by state contractors, the Court noted Connecticut’s sordid (but hardly unique) history with political scandal that fostered the law. Because of this past history with corruption, and the State’s recognized interest in preventing even the appearance of future such corruption, the Second Circuit determined that the contractor contribution ban survived First Amendment scrutiny. (See Green Party of Ct. v. Garfield, 09-0599-cv(L) at p.15-16 & 18-19). That analysis, as far as it goes, seems sensibly grounded and well rooted in Constitutional precedent.

Where the Court’s opinion could be argued to deviate from the terra firma of reality, and where compliance officers throughout the country can be forgiven for muttering to themselves in disbelief, is with respect to the analysis upholding the prohibition on contributions by spouses and children of contractors. Without even identifying past evidence that malevolent contractors have ever used their immediate families to circumvent any laws, the Court nonetheless upheld the ban:

In light of the recent corruption scandals, [the Connecticut] General Assembly must be given “room to anticipate and respond to concerns about” the “circumvention” of the bans on contractor contributions. Indeed, were we to affirm the ban on contributions by contractors but strike down the ban on contributions by their family members, we would invite the very circumvention that the General Assembly was trying to prevent.

Id. at 22.

What may appear logical in judicial chambers can take on an entirely new light when confronted from the perspective of a compliance officer tasked with ensuring that the CEO’s spouse complies with the ban and then periodically inquiring about ongoing compliance. I know I wouldn’t want to be put in the position of telling my own wife who she could make a campaign contribution to. It is especially difficult counseling clients that this conversation has to take place with the CEO. And equally as troubling when weighed against the First Amendment privileges it infringes upon.

Nonetheless, the law and constitutional analysis are clearly here to stay. Look for more states to follow Connecticut’s lead and impose pay-to-play restrictions on extended families.
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