New Jersey’s Dark-Money Law Remains Up in the Air

Colleen O'Dea | February 3, 2020 | Politics
No oral arguments on the merits of the lawsuit have been scheduled
Credit: Eduardo Davad from Pixabay
The Election Law Enforcement Commission reports these nonprofits spent close to $100 million for or against candidates in the 2017 and 2018 elections.

So-called dark-money groups are expected to spend record amounts in this year’s federal elections, particularly in the battlegrounds where Democrats flipped seats two years ago. But New Jersey’s sweeping law to force such organizations to reveal their donors remains in limbo.

A federal judge last October stopped the law from taking effect, saying it is likely unconstitutional, handing at least a temporary victory to the conservative Americans for Prosperity (AFP), which filed suit in federal court just eight days after Gov. Phil Murphy signed the transparency requirements into law.

There was talk of lawmakers voting for a “cleanup” bill to address constitutional concerns both after Murphy signed the bill, under threat of a legislative override of his conditional veto of an earlier version of the same bill, and after U.S. District Court Judge Brian Martinotti issued the preliminary injunction, but the legislative session ended without a fix.

Assemblyman Andrew Zwicker (D-Middlesex), a prime sponsor of the law, has introduced two potential revisions based on concerns raised by Martinotti, Murphy and some organizations, in the new session. But the leaders of both houses of the Legislature asked to intervene in the suit — and the judge granted their request — so any legislative remedy is on hold while the case winds its way through the legal process, he said.

“It doesn’t make sense to move on them,” Zwicker said, adding that the court’s action will dictate what changes to the law to make, if any. “We’re holding tight right now.”

The law requires politically active nonprofits like 501(c)(4) and 527 groups to disclose their large contributors — those giving at least $10,000 — when the groups spend at least $3,000 to influence an election, legislation or regulations. The rules, which Zwicker said would cover groups based in New Jersey, were supposed to take effect last Oct. 15.

According to the state’s election watchdog — the Election Law Enforcement Commission —these nonprofits spent close to $100 million for or against candidates in the 2017 and 2018 elections. The problem, advocates of the dark-money legislation say, is that no one knows who is behind these groups now playing a major role in elections.

Arguments against dark-money law

Americans for Prosperity is arguing the law is unconstitutional for two main reasons. It contends that requiring disclosure violates the right to free speech, as well as the right to advocate anonymously. The group also asserts that the law will “chill” AFP’s free speech by discouraging individuals who seek anonymity from donating to the group because of fears that exposing them will subject them to violence or other repercussions.

During oral arguments last September on AFP’s request for the injunction, the state had argued that the benefits to the public of knowing who is behind election-related spending constitute a vital government interest that makes the law valid.

But Martinotti disagreed, essentially saying the law is too broad. He wrote in his decision that language in the law requiring disclosure by groups that provide political information, including fact or opinion, goes beyond election-related disclosure allowed by the U.S. Supreme Court in past opinions.

One of Zwicker’s bills (A-1206) would modify how the law governs groups that advocate for or against legislation or regulations, including through issue advocacy ads. The other (A-1204)  would focus the law more narrowly on groups specifically advocating for or against a candidate or public question within 60 days before an election and eliminate the requirement for disclosing funders when a group engages only in advocacy toward legislation or regulations.

“It depends on if he (the judge) throws the entire law out or just a piece of it,” Zwicker said in explaining the two bills. “Or does he just say, ‘You know what, I’m going to put this law back on the books and then we do nothing.”

Oral arguments have not been scheduled yet in the matter, but it’s unclear how the state or lawmakers may be able to sway the judge in the AFP case or another, similar suit the American Civil Liberties Union of New Jersey filed that has also challenged the constitutionality of the law.

The state filed its answer to AFP’s initial complaint last month, and it refuted that some of AFP’s specific assertions did not offer up any additional defense of the law beyond what it had filed in earlier court papers and argued in opposition to the preliminary injunction.

In court papers they filed, Senate President Steve Sweeney (D-Gloucester) and Assembly Speaker Craig Coughlin (D-Middlesex) argue that the Legislature “grappled with the enactment of legislation that will pass constitutional muster while addressing the issue of limitless and anonymous ‘dark money’ in the wake of the change” brought by the U.S. Supreme Court’s Citizens United opinion. That decision allowed for corporations and unions’ unlimited independent political spending and led to a rise in issue advocacy or dark-money groups.

‘A new political reality’

“The flood of ‘dark money’ in New Jersey politics has effected a sea-change in the scope and scale of expenditures by independent organizations,” the legislative leaders state. “Confronted with this change, the Legislature responded by enacting a statute that attempts to address the new political reality … The values underlying the First Amendment are undoubtedly implicated in this legislative effort — indeed, such values must be addressed and applied in any legislative effort that affects expenditures on political expression. However, the view of the Presiding Officers is that the application of these First Amendment values must properly reflect the changing nature of political campaigns and political expenditures in the post-Citizens United world.”

They note that Jeffrey Brindle, the New Jersey’s Election Law Enforcement Commission (ELEC)’s executive director, said that the state’s 2018 congressional races drew a record $49 million in dark money, while state and county party committees spent just $8.1 million. By contrast, prior to the Citizens United decision in 2010, independent groups spent little or nothing, while political parties spent $34 million.

The leaders’ court papers sought to refute assertions by AFP’s lawyers that the measure was passed as a result of the political feud between Sweeney and Murphy, with Sweeney trying to force the pro-Murphy grassroots group New Direction New Jersey to disclose its donors as the organization had promised but then changed its mind. The group did so last September, shortly before Martinotti’s hearing on the preliminary injunction.

All legislation includes at least some political infighting and that is irrelevant to the enactment of the law and the need for it, the Senate president and Assembly speaker argue.

“The Legislature’s enactment of S150 was the product of intensive deliberation and amendment by both houses,” Sweeney and Coughlin assert. “The Legislature crafted a statute that mandates disclosure of the contributions and expenditures of independent groups — similar to the long-established disclosure regime applicable to political parties.”

Murphy only signed the bill after lawmakers threatened to override his earlier conditional veto of an identical bill a month earlier. According to Murphy, this was after legislative leaders agreed to amend the new law to eliminate disclosure for groups advocating only for legislation or regulations. Sweeney said there had been no such agreement.

No oral arguments on the merits of the lawsuit have been scheduled yet, so there is no way to know when or whether the law may take effect.

Shining a light on spending

In the meantime, Brindle and good-government advocates continue to argue for the need to shine a light on dark-money spending. He noted in two reports issued last month on political spending by the parties and legislative leaders that do have to report all their donors and expenses that these traditional political vehicles are taking a back seat in campaigns because of the continuing rise of untraceable dark money.

Last year, both Democrats and Republicans  raised about $8.1 million — $1 million less than in 2015, the last time state Assembly races topped balloting — and spent $8.8 million, slightly less than four years earlier, one ELEC report showed. The other found that fundraising and spending by the Big Six committees — the super PACs of the Democratic and Republican state committees and the party leaders in the Senate and Assembly — was the lowest in at least a dozen years, and also less than in 2015.

“The long-term financial decline of party committees must be reversed because they are more accountable and transparent than the fast-spreading array of independent special interest committees that now dominate the electoral landscape in New Jersey,” Brindle said. “Higher contribution limits for party committees, an exemption from pay-to-play restrictions, and a requirement that independent spenders fully disclose their donors just like parties and candidates would help reinvigorate the parties.”