Legal Challenge to NJ’s Contentious New Dark-Money Law

Colleen O'Dea | July 2, 2019 | Politics
Gov. Phil Murphy reluctantly signed legislation that would require certain groups to disclose political spending. A conservative group is seeking an injunction to prevent the law from taking effect

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Dark money
New Jersey’s two-week-old law requiring dark-money groups to report their large funders is facing a legal challenge even before lawmakers begin to move a bill that would substantially limit the type of disclosure covered.

Americans for Prosperity, an influential conservative politically active nonprofit is seeking an injunction in U.S. District Court to prevent the law from taking effect. It contends the law is unconstitutional, saying the “breathtaking sweep” of its coverage of elections, legislation and other political advocacy puts “First Amendment liberties at stake” and will do “irreparable harm to donors nationwide.” AFP is funded by the multibillionaire Charles Koch of Koch Industries.

When he signed the measure into law two weeks ago, Gov. Phil Murphy had called on legislators to quickly send him another bill that would roll back much of the disclosure law, addressing at least some of the concerns AFP raised in its suit. An Assembly bill was introduced immediately and briefly scheduled for a vote, but never voted on. No such bill has been offered in the Senate yet.

Austin Graham, state and local campaign finance attorney with the Campaign Legal Center, said that while a number of other states have laws requiring some disclosure by groups involved in grassroots advocacy related to legislation, New Jersey’s bill is unique in that it “grouped issue advocacy in with elected-related spending.” As a result, he said, existing case law is unclear as to the odds of the courts upholding New Jersey’s law.

“It’s hard to speculate,” Graham said. “There is no spot-on precedent.”

The new law requires politically active nonprofits or 501(c)(4) groups to disclose their high-dollar contributors — those giving at least $10,000 — when these groups spend at least $3,000 to influence an election, legislation, or regulations. The New Jersey Election Law Enforcement Commission has reported that dark-money groups spent close to $50 million to influence the state’s gubernatorial and legislative races in 2017; ELEC has been calling for years for some disclosure by dark-money groups.

Arguing for, arguing against

Good-government organizations supported the effort. A broad spectrum of other organizations, including ACLU-NJ, pro-environment groups and the Latino Action Network, opposed it, stating in a letter to legislative leadership last week that the law “poses a threat to progressive ideals and should be immediately amended.” Those groups had threatened a lawsuit over the new law, but AFP filed its action first, last Tuesday.

“All Americans should be free under the First Amendment to choose how to share their beliefs,” the 501(c)(4) said in a statement about the lawsuit. “We’re proud to stand with a diverse array of issue organizations and community groups to protect those rights. This legislation could erode those foundational freedoms — making it harder for people to engage on the issues they’re passionate about, exposing them to potential retaliation, and, in doing so, insulating politicians from critique.”

The lawsuit, filed in U.S. District Court in Trenton, is asking for a preliminary injunction to stop the state from enforcing the law while it argues its case to overturn the law on constitutional grounds.

“This stunningly broad reach of S150 leaps far beyond anything the First
Amendment permits,” AFP argues in legal papers. “If the law takes effect, merely stating facts or offering opinions about laws, or even regulations, will trigger invasive disclosure requirements and daunting burdens of the sort reserved for regulating elections. No such bid by the government to equate mere conveyance of factual information and issue advocacy with electioneering can possibly withstand exacting scrutiny.”

The suit cites past cases in which similar rules in New Jersey were overturned. Those are more than 35 years old, though, and predate more recent laws and court rulings, including the Citizens United decision in which the U.S. Supreme Court ruled that government cannot stop corporations or unions from spending money to influence elections.

Risk of harassment alleged

AFP also argues in court papers, as other groups had during deliberations over the bill, that disclosing its donors could put it at risk of harassment or worse.

“If outed publicly, donors face boycotts, character assassinations, and threats,” the suit states. “These threats can be disturbing and extreme. The New Jersey chapter’s former director, Erica Jedynak, received numerous harassing messages, and her husband has even received death threats. Indeed, the FBI has investigated (and deemed credible) numerous unhinged death threats against AFP’s associates and even a threatened terroristic attack. Charles and David Koch themselves have received numerous death threats leveled against them and their families.”

Murphy had sided with organizations’ complaints that having to make their donors public would discourage people from making contributions and he initially conditionally vetoed the bill last May. But the measure had received broad support in both houses and legislative leaders had threatened to override his conditional veto.

The governor soon thereafter signed a bill identical to the one he had vetoed but called on lawmakers to pass a “cleanup” bill to address the law’s impact on nonprofit groups that do not engage in election-related advocacy. He said legislative leaders had agreed to roll back what one staffer characterized as 80 percent of the new law.

Assembly Speaker Craig Coughlin (D-Middlesex) was ready to do so, posting for a vote but then quickly withdrawing A-5633, which Assemblyman Andrew Zwicker (D-Middlesex) had introduced; Zwicker was one of the prime sponsors of the law Murphy had signed. Senate President Steve Sweeney (D-Gloucester), however, said there was no such agreement and he would consider amending the law in the future if it proves to be necessary.

Up in the air

In a letter to Coughlin, Sweeney, Zwicker and chief Senate sponsor of the law Sen. Troy Singleton (D-Burlington), more than 30 groups had urged floor votes in both houses on Zwicker’s bill. “This bill isn’t perfect, but it protects advocacy organizations from the most onerous unconstitutional provisions in the existing law and gives us breathing room to discuss more comprehensive reforms,” they wrote.

That didn’t happen and, with both houses having recessed for the summer, it’s unclear when or whether the Legislature might act.

Murphy’s call to exempt grassroots organizations that are not specifically advocating on election-related issues would seem to apply to the nonprofit New Direction New Jersey, a 501(c)(4) that backs the governor. That is not likely to sit well with Sweeney. The feud between the two is the main reason the law got passed this year.

New Direction’s pro-Murphy spending while reneging on a promise to voluntarily disclose its funders was what prompted Sweeney to put the dark-money bill on a fast track earlier this year, after it had previously languished without even a hearing.

Murphy wants the law changed so that a group like New Direction that does not specifically advocate for or against a candidate running for office or a ballot question does not have to disclose its donors. Only groups that engage in such electioneering should have to report who is funding them, Murphy advocates.

A spokesman for state Attorney General Gurbir Grewal declined to comment on the suit. The state has until August 5 to file its response. If lawmakers do not move to amend the law, it could create the unique situation of requiring the attorney general to defend a law that the governor does not particularly like.