Does Free Speech Sound the Death Knell for State Pay-to-Play Laws Governing Public Works Contractors?

April 28, 2014

What is the proper role of the First Amendment in monitoring regulation of political contributions and how does that role impact on state pay-to-play laws governing public works contractors? The recent decision of McCutcheon v. FederaSupreme Court Buildingl Election Comm’n, answers the first question, and this blog post speculates on the second.

Battle of Titans

In McCutcheon, the Court addressed the constitutionality of federal campaign finance laws restricting the “aggregate limits” each person may contribute to political candidates or campaigns per election cycle. By a 5-to-4 majority, the Court struck down the aggregate limits as violative of the rights of free speech and association. Of interest here is the perceived role of the First Amendment in monitoring campaign contribution laws and the different understandings of that role by the plurality (Roberts, C.J.) and dissent (Breyer, J.).

According to Chief Justice Roberts, the First Amendment should promote maximum participation in the political process, and monetary contributions is one form of participation on par with licking envelopes or running for office. The government’s interest in regulation of political contributions is accordingly very narrow. In the Court’s words, “while preventing corruption or its appearance is a legitimate objective, Congress may target only a specific type of corruption—‘quid pro quo’ corruption.” With regard to the government’s interest in preventing the appearance of corruption, he stated: “And because the Government’s interest in preventing the appearance of corruption is equally confined to the appearance of quid pro quo corruption, the Government may not seek to limit the appearance of mere influence or access.” (Italics added.)

Justice Breyer would have permitted the government a larger role in preventing the appearance of corruption. He reasoned that “the First Amendment advances not only the individual’s right to engage in political speech, but also the public’s interest in preserving a democratic order in which collective speech matters.” (Dissent’s italics.) In other words, broad regulation of the appearance of corruption furthers the First Amendment’s role in promoting a democratic marketplace of ideas. “Where enough money calls the tune, the general public will not be heard. Insofar as corruption cuts the link between political thought and political action, a free marketplace of political ideas loses its point.”

Pay-to-Play: Old Law

What impact will triumph of the plurality’s narrow governmental interest in preventing the appearance of corruption have on pay-to-play laws regulating public works contractors? Let us look at two such laws: one in Colorado and one in New Jersey.

In 2008, Colorado voters passed Amendment 54 to the Colorado Constitution. Amendment 54’s stated purpose was to prevent a “presumption of impropriety” between campaign contributions by holders of sole-source contracts and government procurement. In Dallman v. Ritter, the court began its analysis by finding that the government’s interest—preventing the appearance of impropriety—was sufficiently important to merit regulation. The court struck down the Amendment only because it was overly broad.

New Jersey’s pay-to-play law prohibits the award of public contracts to any contractor who contributed at least $300 to a statewide political figure in the past 18 months. The legislature’s declared purpose was to prevent “widespread cynicism among the public that special interest groups are ‘buying’ favors from elected officeholders.” In In re Earle Asphalt Co. the court upheld the statute against constitutional challenge. Not only was preventing the appearance of impropriety a permissible governmental function, but regulation specifically targeting the construction industry was entitled to judicial deference.

McCutcheon Sweeps Away

McCutcheon sweeps away the pre-existing law of pay-to-play regulation by eviscerating the premise of all such laws: that regulation of the appearance of corruption or impropriety—broadly construed—is a valid governmental purpose. The McCutcheon plurality’s definition of the appearance of corruption as the appearance of quid pro quo corruption eviscerates any notion of judicial deference. That definition requires a finding of specific contracts or transactions having been subject to a quid pro quo exchange. A free-floating “global” concern with the appearance of impropriety no longer makes the grade.

Nor is a regulation narrowly aimed at a specific group of possible donors—those in the construction industry—presumptively constitutional. On the contrary, McCutcheon’s requirement of a closely-drawn nexus between the perceived evil and the governmental remedy is at odds with a per se suspicion aimed at a specific industry. This is particularly true as many public contracts are already shielded from the threat of favoritism or corruption by competitive bidding laws.

Written by Marc Schneier