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).

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Photo of Lawrence H. Norton Lawrence H. Norton

Larry Norton, a former general counsel of the Federal Election Commission (FEC), advises clients on federal and state campaign finance laws, lobbying disclosure, gift and ethics rules, pay-to-play laws, and the tax implications of political activities. His clients include corporations and their PACs…

Larry Norton, a former general counsel of the Federal Election Commission (FEC), advises clients on federal and state campaign finance laws, lobbying disclosure, gift and ethics rules, pay-to-play laws, and the tax implications of political activities. His clients include corporations and their PACs, advocacy groups and trade associations, candidates, super PACs, lobbying shops and law firms, and high-net-worth individuals. Larry recognizes the unique issues facing organizations seeking to influence public policy and elections. He provides pragmatic and creative solutions to complex problems, troubleshoots new projects and programs, and helps clients manage their legal and reputational risks.

Photo of Ronald M. Jacobs Ronald M. Jacobs

Ron Jacobs focuses his practice on political law, nonprofit organizations, and crisis management, including congressional investigations, class actions, and regulatory investigations. Ron founded and co-chairs the firm’s nationally recognized Political Law practice. He advises clients on all aspects of state and federal political…

Ron Jacobs focuses his practice on political law, nonprofit organizations, and crisis management, including congressional investigations, class actions, and regulatory investigations. Ron founded and co-chairs the firm’s nationally recognized Political Law practice. He advises clients on all aspects of state and federal political law, including campaign finance, lobbying disclosure, gift and ethics rules, pay-to-play laws, and tax implications of political activities.

Janice M. Ryan

Janice Ryan is an experienced general counsel to tax-exempt organizations, specializing in lobbying and political activities compliance. Janice counsels advocacy groups, charities, associations, political organizations, and businesses on the full spectrum of legal issues related to their efforts to influence public policy and…

Janice Ryan is an experienced general counsel to tax-exempt organizations, specializing in lobbying and political activities compliance. Janice counsels advocacy groups, charities, associations, political organizations, and businesses on the full spectrum of legal issues related to their efforts to influence public policy and elections. She is adept at delivering creative solutions to complex problems and providing pragmatic day-to-day general counseling tailored to her clients’ specific needs and goals. Janice’s clients appreciate her accessibility and responsiveness, and her ability to bring together and manage the right team of attorneys within the firm to solve the problem at hand, providing her clients with seamless, full-service legal support.

Lindsay M. Nathan

Lindsay Nathan provides strategic advice and guidance to nonprofit organizations, political groups, candidates, and corporations on all aspects of federal, state, and local campaign finance and lobbying compliance, government ethics, and gift rules. Lindsay also counsels tax-exempt organizations on legal issues impacting nonprofits…

Lindsay Nathan provides strategic advice and guidance to nonprofit organizations, political groups, candidates, and corporations on all aspects of federal, state, and local campaign finance and lobbying compliance, government ethics, and gift rules. Lindsay also counsels tax-exempt organizations on legal issues impacting nonprofits, including governance, tax, fundraising, and transactional matters. Prior to joining Venable, Lindsay served as the chief in-house counsel for the nation’s largest gun violence prevention nonprofit organization, Everytown for Gun Safety. She also has direct experience working in the public sector and previously held several senior positions in the Office of the Governor of New York.