A Victory For “Pay to Play” Reformers

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By Michael M. Shapiro
Last month, the Appellate Division of the Superior Court of New Jersey issued a decision in In the Matter of the Appeal by Earle Asphalt Company, a case involving the owner of a road construction business and his political contribution to the Monmouth County Republican Committee in June 2007.

Walter Earle III, owner of Earle Asphalt Company, made the contribution at the behest of former State Senate President John Bennett, failing to realize that the contribution could bar him from obtaining business from the state. After obtaining counsel and being advised that his contribution might violate “pay-to-play” laws, Earle requested that the contribution be returned. Meanwhile, Earle Asphalt Company submitted a bid to the New Jersey Department of Transportation for a roadwork contract involving Interstate 195.

It was the low bid and therefore Earle Asphalt would have been awarded the State contract. However, the Department of Treasury informed the company that it was disqualified from award of the contract because of Earle’s June 2007 political contribution. Earle appealed this decision and took the
matter to court.

At issue was a 2005 amendment to the Campaign Contributions and Expenditure Reporting Act, also known as Chapter 51, which prohibits the awarding of a contract of over $17,500 by a state agency to a business entity that has provided more than $300 in the preceding eighteen months to any State or county political party, the governor, or a candidate for governor. The company’s primary argument was that Chapter 51 violated its freedom of speech and association rights.

Citing a decision by the United States Supreme Court, the Superior Court of New Jersey stated that a statute, like Chapter 51, that limits political contributions is appropriate if the State is able to show a sufficiently important interest and the statute is written in such a way as to avoid unnecessary restrictions to the freedom of association.

The court quoted at length from the findings and declarations of Chapter 51 which read in part, “It is essential that the public have confidence that the selection of state contractors is based on merit and not on political contributions made by such contractors and it is essential that the public have trust in the processes by which taxpayer dollars are spent…” Finding that this interest is important enough to warrant Chapter 51’s existence and that the statute does not unnecessarily impinge on the freedom of association, the court held that Chapter 51 is constitutional.

While Earle Asphalt argued that because the contract at issue was competitively bid and therefore a political contribution would not have an impact on the decision reached, the court disagreed finding that even with competitive bidding, there is substantial discretion on the part of state officials regarding the awarding of the contract and its policing, including the determination of whether a bid conforms to the specifications of the contract.

Earle’s secondary argument was that since he requested that the contribution be returned, he should be able to take advantage of a “safe harbor” provision in Chapter 51 that states that if someone makes a contribution and has it returned to him within 30 days, under certain circumstances, the incident will not disqualify the apologetic contributor from obtaining State contracts. Here, the contribution was eventually returned to Earle, but after the 30-day period that Chapter 51 provides for returning/rescinding contributions.

The court said that the language of Chapter 51 is clear that the contribution has to be returned within 30 days and that this did not happen in Earle’s case. Further, the court said that Earle also did not follow the procedures set out in Chapter 51 for having a contribution returned. For example, instead of requesting in writing that the contribution be returned, he simply left voicemails for State Senator Bennett requesting that the contribution be returned. As a result, the court found Earle’s secondary argument unpersuasive.

The court’s decision upholding Chapter 51 is a major victory for “pay to play” reformers. While it may once again be appealed, for now it provides further legal support for the notion that it is constitutional to ban contributions by contractors to state officials and state and county political parties.

As a result, the legal argument raised by many entities in opposition to “pay to play” reforms that such reforms may be unconstitutional is now on very shaky legal ground. Therefore, expect more “pay to play” reform legislation to be enacted by governmental bodies and look for reformers to propose more far-reaching “pay to play” laws in the months ahead.

Michael M. Shapiro, founder of ShapTalk.com, is an attorney who resides in New Providence. He currently serves as the editor of The Alternative Press, www.thealternativepress.com. Contact Mike at mike@shaptalk.com.


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