On October 2, 2019, a federal judge blocked the State of New Jersey from implementing and enforcing new campaign finance reporting and donor disclosure rules for 501(c)(4) and 527 organizations, which were enacted earlier this year as part of a sweeping and controversial campaign finance bill, S. 150. In its ruling, the Court found that the plaintiffs likely would succeed on their claim that these provisions of S. 150 violate the First Amendment. The case will now proceed to trial for a final decision. The decision follows that of another federal judge who earlier this week struck down on First Amendment grounds two provisions of New York’s lobbying law that would have required nonprofits to disclose their donors.

The controversial legislation expanded New Jersey’s campaign finance law to require 501(c)(4) and 527 organizations that engage in issue advocacy to register and report as “independent expenditure committees.” The law would have required groups that raise or spend $3,000 or more either (1) to “influence or attempt to influence” any New Jersey election, public question, legislation, or regulation, or (2) that provide “political information” on any New Jersey candidate, public question, legislation, or regulation to publicly disclose on campaign finance reports all expenditures of more than $3,000 for such purposes. It would also require such groups to disclose all donors who contribute more than $10,000 for any purpose. The new law was set to go in effect on October 15, 2019.

Several groups directly affected by the new law have challenged its constitutionality in federal court. In this case, the Court agreed that the plain language of the statute would likely not pass constitutional muster, emphasizing that the provisions would improperly subject organizations engaged in issue advocacy to the same disclosure obligations for organizations attempting to influence an election. A separate, simultaneous challenge to the definition of “independent expenditure committee” is still pending before the Court.

The case will now continue to trial. Although the implementation of the donor disclosure and other reporting provisions are currently on hold pending trial, the Court noted that the New Jersey Legislature and the Election Law Enforcement Commission may take legislative action in the meantime to amend or clarify the law’s constitutional deficiencies.

The opinion and order were issued in Americans for Prosperity v. Grewal, No. 3:19-cv-14228-BRM-LHG (D.N.J. Oct. 2, 2019).