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The Second Circuit, Lobbying Regulation, and the “Appearance of Corruption”

In Green Party of Connecticut v. Garfield, decided last month, the Second Circuit considered a First Amendment challenge to Connecticut’s Campaign Finance Reform Act, a law that prohibited campaign contributions and fundraising solicitations by (1) state contractors and prospective contractors and (2) lobbyists.  The law also covered certain individuals, such as family members, associated with contractors and lobbyists. There are two aspects of this decision that I find of interest.  The first, which I will discuss today, involves the court’s application of the “appearance of corruption” standard to the ban on campaign contributions.  The court begins its analysis by finding that limitations on campaign contributions are not subject to the most exacting standard of review, strict scrutiny, but only the more relaxed “closely drawn” standard (under which a law will be upheld if it is closely drawn to match a sufficiently important governmental interest).  This is based on the theory that campaign contributions, while they implicate a First Amendment interest, are “closer to the edges than to the core of political expression.” Finding that CFRA was passed in response to several corruption scandals in Connecticut involving bribes paid to public officials by contractors and prospective contractors, the court had little difficulty in finding a sufficiently important public interest in limiting contractor campaign contributions.  The court had more trouble, however, justifying Connecticut’s total ban on such contributions.  The panel noted that a complete ban was a “drastic measure” and expressed skepticism that allowing small contributions by contractors would lead to actual corruption. Nevertheless, it concluded that the state had a strong interest in preventing even the appearance of corruption.  Noting that “Connecticut’s recent corruption scandals were widely publicized, and corruption involving contractors became a political issue,” it found the ban on contractor contributions “an appropriate response to a specific series of incidents that have created a strong appearance of corruption with respect to all contractor contributions.” Moreover, the Second Circuit upheld the contribution ban as applied to contactor “principals,” defined to include a wide range of officers, directors, shareholders and managerial employees, and family members, despite the absence of evidence that such individuals had been involved in the corruption scandals.  Although the court expressed reservations as to whether the bans on these individuals were in fact “closely drawn,” it decided that it should give the legislature leeway to define broadly the category of individuals who might be used as a conduit or means of circumventing the ban on contractor contributions.  It justified this decision on the grounds that “the recent corruption scandals in Connecticuthave shown that contractors are willing to resort to varied forms of misconduct to secure contracts with the state.” Turning to the ban on lobbyist contributions, the court observed that this prohibition was “markedly different” because “the recent corruption scandals in Connecticut in no way involved lobbyists.”  It therefore concluded that “there is insufficient evidence to infer that allcontributions made by state lobbyists give rise to an appearance of corruption.” It acknowledged that the public may distrust the lobbyists because of the perception that they wield undue influence over public officials.  However, the court rejected the proposition that such influence amounts to corruption: Influence and access, moreover, are not sinister in nature.  Some influence, such as wise counsel from a trusted advisor—even if that advisor is a lobbyist—can enhance the effectiveness of our representative government. Accordingly, the court held that the ban on lobbyist contributions was not “closely drawn” and therefore violated the First Amendment. The court’s differing treatment of contractors and lobbyists illustrates the vagaries of an “appearance of corruption standard.”  The court allows the public to jump to the erroneous conclusion that small contributions by contractors or prospective contractors are corrupting because some such entities have actually corrupted state officials in the past (albeit not through small contributions).  The court will also allow the public to jump to the erroneous conclusion that small contributions by principals or family members of contractors are indirect means of corruption, even though there is little or no evidence of such indirect means being used in the past.  But the court will not allow the public to jump to the erroneous conclusion that small contributions by lobbyists (or lobbyists’ families) are corrupting because, unbeknownst to the public, what it perceives as corruption is merely influence-peddling. It is worth noting that the Second Circuit’s ruling with respect to lobbyist contributions is in considerable tension with the Fourth Circuit’s 1999 opinion in North Carolina Right to Life v. Bartlett,  where the court upheld a North Carolina statute prohibiting lobbyists from contributing to state legislators while the legislature was in session.  Although the cases are distinguishable on the grounds that the North Carolina ban was much narrower than the one in Connecticut, the Fourth Circuit recognized a compelling state interest in preventing corruption and the appearance of corruption in restricting lobbyist contributions.  In doing so it explicitly rejected the notion that it needed to wait for a specific North Carolinascandal: While lobbyists do much to inform the legislative process, and their participation is in the main both constructive and honest, there remain powerful hydraulic pressures at play which can cause both legislators and lobbyists to cross the line. State governments need not await the onset of scandal before taking action. Thus, the court rejected the First Amendment challenge to North Carolina’s (more limited) ban on lobbyist contributions.

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