New Jersey donor disclosure law faces legal challenges

On June 25, Americans for Prosperity filed a lawsuit in U.S. District Court alleging New Jersey S150, which amended the New Jersey Campaign Contributions and Expenditures Reporting Act, violates the First Amendment. 

• Who are the parties to the suit?
  • Americans for Prosperity, the plaintiff, is a 501(c)(4) political advocacy group that describes itself as “an organization of grassroots leaders who engage citizens in the name of limited government and free markets on the local, state and federal levels.” The defendants are New Jersey Attorney General Gurbir Grewal (D) and the commissioners of the Election Law Enforcement Commission: Eric Jaso, Stephen Holden, and Marguerite Simon.

• What is at issue?
  • Attorneys for Americans for Prosperity wrote. “The First Amendment safeguards individuals’ rights to associate privately and advocate anonymously throughout the United States. … Protecting the integrity of elections may be a sufficiently important reason to justify, under exacting scrutiny, regulation of electioneering communications, but the same is not true of issue advocacy. Rammed through in a rush to exact political revenge, [S150] obliterates this fundamental distinction and oversteps constitutional bounds by subjecting issue advocacy to the formidable regulations and burdens properly reserved for electioneering.”

• What does the legislation do? 
  • S150 defines an independent expenditure committee as any person or group organized under sections 501(c)(4) or 527 of the Internal Revenue Code that spends $3,000 or more annually to influence or provide political information about any of the following:
    • “the outcome of any election or the nomination, election, or defeat of any person to any state or local elective public office”
    • “the passage or defeat of any public question, legislation, or regulation”
    • Independent expenditure committees will be required to disclose all expenditures exceeding $3,000. These committees will also be required to disclose the identities of their donors who contribute $10,000 or more.
    • Political context: New Jersey is a Democratic trifecta, meaning Democrats control the governorship and both chambers of the state Legislature.

• How have the defendants responded?
  • Neither the attorney general nor the Election Law Enforcement Commission have commented publicly on the litigation. 
• The case, Americans for Prosperity v. Grewal (case number 3:19-cv-14228), was filed in the U.S. District Court for the District of New Jersey. 

What we’re reading

• Politico, “Treasury defends move to halt nonprofit disclosures amid Wyden threat,” July 17, 2019
   
• San Francisco Examiner, “Voters to decide on increased campaign finance disclosures, new limits on contributions,” July 15, 2019
   
• The Hill, “Democrats press IRS on guidance reducing donor disclosure requirements,” July 11, 2019
   
• New Jersey Law Journal, “‘Dark Money’ Donor Law Faces Free Speech Challenge by Koch-Backed Group,” June 26, 2019

The big picture

Number of relevant bills by state

We’re currently tracking 72 pieces of legislation dealing with donor disclosure. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we’re tracking.

Number of relevant bills by current legislative status

Number of relevant bills by partisan status of sponsor(s)

Recent legislative actions

Below is a complete list of legislative actions taken on relevant bills in the past two weeks. Bills are listed in alphabetical order, first by state then by bill number. Know of any legislation we’re missing? Please email us so we can include it on our tracking list.

• New Hampshire SB105: This bill would establish disclosure requirements for certain contributions made to inaugural committees.
  • Enacted July 15.
• New Hampshire SB156: This bill would require that political contributions made by limited liability companies be allocated to individual members in order to determine whether individuals have exceeded contribution limits.
  • Vetoed July 15.

TRUMP ADMIN. PROPOSES RULE EASING CANCELLATION OF UNION DUES

On July 3, the Office of Personnel Management (OPM) asked the Federal Labor Relations Authority (FLRA) to issue a rule change that would allow federal employees to resign from their unions, and revoke dues payroll deductions, at any time after the first year of membership.  

• What is the current policy? Section 7115(a) of the Federal Service Labor-Management Relations Statute states any “written assignment which authorizes the agency to deduct from the pay of the employee amounts for the payment of regular and periodic dues” cannot be revoked for a period of one year. FLRA has construed this statute to mean that dues deductions can only be revoked at one-year intervals. 
   
• What is the proposed policy? OPM has asked FLRA to issue the following statement of policy: 
   
  • “The constitutional principles clarified in Janus have general applicability to agencies and labor organizations in the area of federal employees’ requests to revoke union-dues assignments under Section 7115(a) of the Statute.”
     
  • “Consistent with Janus, upon receiving an employee’s request to revoke a previously authorized union-dues assignment, an agency should process the request as soon as administratively feasible, if at least one year has passed since the employee initially authorized union-dues assignment from the employee’s pay.”
     
• What comes next? FLRA issued a request for comment on the proposed rule change in the July 12 edition of the Federal Register. Comments are due on or before Aug. 12, 2019. 

THE BIG PICTURE

Number of relevant bills by state

We are currently tracking 101 pieces of legislation dealing with public-sector employee union policy. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we’re tracking. 

Number of relevant bills by current legislative status

Number of relevant bills by partisan status of sponsor(s)

RECENT LEGISLATIVE ACTIONS

Below is a complete list of legislative actions taken since our last issue. Bills are listed in alphabetical order, first by state then by bill number. 

• Massachusetts H3854: This bill would authorize employers to disclose personal employee information to unions. It would also permit unions to require non-members to pay for the costs associated with grievance and arbitration proceedings. It would require employers to provide unions with access to employees, and it would allow for dues deduction authorizations to be irrevocable for a period of up to one year. 
  • House rejected governor’s proposed amendments July 22.

The Checks and Balances Letter delivers news and information from Ballotpedia’s Administrative State Project, including pivotal actions at the federal and state levels related to the separation of powers, due process and the rule of law.

This edition:

In this edition, we review President Donald Trump’s (R) move to acquire citizenship information after federal judges blocked administration efforts to add citizenship status to the 2020 census; an upcoming United States Supreme Court (SCOTUS) case challenging the Trump administration’s efforts to end the Deferred Action for Childhood Arrivals (DACA) program; and a recent SCOTUS ruling that both upheld and limited Auerdeference.

At the state level, we highlight a new Indiana law that moves the state’s administrative law judges (ALJs) from agency control to a centralized panel, as well as a ruling from the Wisconsin Supreme Court upholding the state’s regulatory reform. We also present The Wall Street Journal’s interview with Judge Andrew Oldham of the United States Court of Appeals for the Fifth Circuit on his forthcoming paper examining the Anti-Federalists’ prescience on the rise of the administrative state.

As always, we wrap up with our Regulatory Tally, which features information about the 174 proposed rules and 262 final rules added to the Federal Register in June and OIRA’s regulatory review activity.

The Checks and Balances Letter

In Washington

Trump to collect citizenship information through executive order instead of 2020 census

What’s the story? President Trump announced on July 11, 2019, that his administration would cease efforts to add a citizenship question to the 2020 U.S. census and instead direct federal agencies through executive order to provide the information to the U.S. Department of Commerce.

Commerce Secretary Wilbur Ross approved the citizenship question for the 2020 U.S. census as necessary to improve enforcement of the Voting Rights Act. The proposed question would have asked, “Is this person a citizen of the United States?”

The citizenship question was blocked by three federal district court judges on grounds that it violated the Constitution’s Enumeration Clause and the Census Act, and that the administration failed to follow proper procedure.

By a vote of 5-4, the United States Supreme Court affirmed the legality of a citizenship question on the census but effectively barred the administration from including it by remanding the case, Department of Commerce v. New York, to the agency for review.

The ruling invoked precedent from Citizens to Preserve Overton Park v. Volpe (1971) to evaluate agency decisions beyond the scope of the administrative record.

The dissenting justices argued that the exception opens a new legal avenue for challengers to contest administrative actions based solely on alleged pretextual reasoning by agency decision-makers outside of the administrative record.

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SCOTUS agrees to decide whether administrative procedures must be followed to eliminate improperly issued rules

What’s the story? The United States Supreme Court will determine whether the Trump administration can end the Deferred Action for Childhood Arrivals (DACA) program through a memorandum rather than rulemaking procedures after it granted certiorari on June 28 in Department of Homeland Security v. Regents of the University of California.

The case could clarify whether federal agencies must follow the Administrative Procedure Act’s (APA) rulemaking procedures to end programs that were created without following APA procedures. Oral argument is scheduled for November 12, 2019.

The Obama administration created DACA in 2012 to prevent the deportation of young people who were unlawfully brought into the country as children. The program was established through a memorandum rather than APA rulemaking procedures.

The Trump administration on September 5, 2017, rescinded DACA, arguing that the program was unlawful because the Obama administration failed to follow APA rulemaking procedures.

Regents of the University of California sued the administration for failing to follow the APA in rescinding the program.

DHS argued, in part, that the decision to end DACA was exempt from APA rulemaking because it was improperly created.

The United States District Court for the Northern District of California barred the administration from rescinding DACA. The administration appealed to the United States Supreme Court.

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SCOTUS upholds and limits Auer deference

What’s the story? The United States Supreme Court on June 26 unanimously (with concurring opinions) upheld Auerdeference—the practice of federal courts deferring to administrative agencies’ interpretations of ambiguous regulations. However, the ruling also limited application of the principle.

The opinion written by Justice Kagan set the following parameters for Auer deference:

• 1. Auer deference applies only when a regulation is ambiguous. Courts must first consider the text, structure, history, and purpose of a regulation before deferring to an agency’s reasonable interpretation.
• 2. Whether the reasonable agency interpretation of a regulation is an authoritative or official position of the agency.
• 3. Auer deference is only appropriate for regulatory matters that fall within agency expertise.
• 4. An agency’s interpretation must be a “fair and considered judgment” that does not create unfair surprise for those subject to the regulation. Moreover, courts should not defer to agency interpretations that were only adopted in order to assist the agency in a lawsuit.

Justice Gorsuch authored a concurring opinion, joined by Justices Thomas, Alito, and Kavanaugh, that criticized the court for not invalidating Auer altogether, noting the court’s responsibility “to say what the law is and afford the people the neutral forum for their disputes that they expect and deserve.”

The case Kisor v. Wilkie involved a marine veteran who challenged a U.S. Department of Veterans Affairs’ (VA) interpretation of a regulation that determined the effective date of retroactive disability benefits. The United States Supreme Court unanimously vacated and remanded the judgment of the Federal Circuit Court of Appeals, which had failed to consider whether the VA’s regulation had more than one reasonable meaning. The court instructed the Federal Circuit to reconsider its application of Auer deference in the case.

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In the States

Indiana moves ALJ supervision to centralized panel

What’s the story? A new Indiana law shifted oversight of the state’s administrative law judges (ALJs) from state agency supervision to the Office of Administrative Law Proceedings (OALP), housed under the State Personnel Office.

Proponents of Senate Enrolled Act 1223 say that the change protects the independence of ALJs by removing them from agency control.

The OALP has the authority to hire and train ALJs, assign them to cases, and create and enforce a judicial code of conduct.

Eleven agencies have ALJ systems that are governed by separate statutes and, therefore, are exempt from the change.

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Wisconsin Supreme Court affirms state REINS Act

What’s the story? The Wisconsin Supreme Court on June 25 ruled 4-2 in Koschkee v. Taylor to affirm that the state’s Department of Public Instruction (DPI) must submit new rules to the governor for approval before they take effect.

Wisconsin’s Regulations from the Executive in Need of Scrutiny (REINS) Act, the first state-level REINS Act signed into law in August 2017 by Governor Scott Walker (R), requires state agencies to obtain gubernatorial approval for proposed regulations.

The Wisconsin Institute for Law and Liberty (WILL) sued former Superintendent of Public Instruction Tony Evers (D) and the DPI in November 2017 for allegedly violating the state REINS Act by failing to submit statements of scope for proposed rules to the State Department of Administration for approval.

Evers and DPI argued that the state superintendent is a constitutional office not subject to gubernatorial control under the REINS Act.

Koschkee v. Taylor affirmed that DPI exercises delegated legislative power when it promulgates rules and, therefore, its rulemaking activities are subject to control by the state legislature. By passing the REINS Act, the state legislature required DPI to obtain gubernatorial approval prior to promulgating new rules.

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How the Anti-Federalists foretold the rise of the administrative state

Judge Andrew Oldham of the United States Court of Appeals for the Fifth Circuit spoke to The Wall Street Journal for a July 3 article examining the Anti-Federalists’ views on the evolution of executive power. The Anti-Federalists, Oldham explained, were uneasy about far-reaching executive power. Oldham argues that, in many ways, the Anti-Federalists foresaw the development of the administrative state:

“Judge Oldham is impressed by the prescience of Anti-Federalist concerns ‘about the way executive power would evolve over time.’ In a forthcoming paper for the New York University Journal of Law & Liberty, he quotes the Anti-Federalist Cato (thought to be future Vice President George Clinton), who wrote that the presidency would ‘create a numerous train of dependents’ in the executive branch, so that the president would end up ‘surrounded by expectants and courtiers’—an aristocracy, which might be compared to today’s Washington elite.

“No one in the 18th century could predict the form the federal bureaucracy would take in the 20th century. Yet the Anti-Federalists’ concerns are telling. They worried about ‘the capaciousness of executive power,’ Judge Oldham says, comparing it to ‘the abuses of the past that they’d seen in England.’ The Federalists countered that the separation of powers would prevent any part of the new federal government from becoming too powerful. The legislative, executive and judicial branches were coequal and would check and balance one another.

“Yet in recent decades, as Christopher DeMuth has written, ‘Congress has delegated its lawmaking powers: voting by lopsided margins for goals such as clean air and equality of the sexes, while leaving the hard choices—the real legislating—to specialized executive-branch agencies.’ These administrative agencies not only make rules but enforce and adjudicate them—carrying out the functions of all three governmental branches with nary a check.”

Click here to read the full article.

Regulatory Tally

Federal Register

• The Federal Register in June reached 31,170 pages. The number of pages at the end of each June during the Obama administration (2009-2016) averaged 37,979 pages.
• The Federal Register included 174 proposed rules and 262 final rules during June 2019. The regulations included new car title loan regulations, restrictions on flights to Cuba, and updated international mail prices, among other rules.

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Office of Information and Regulatory Affairs (OIRA)

OIRA’s June regulatory review activity included:

• Review of 37 significant regulatory actions. Between 2009-2016, the Obama administration reviewed an average of 47 significant regulatory actions each June.
• Recommended changes to 36 proposed rules.
• Agencies withdrew one rule from the review process.
• As of July 1, 2019, the OIRA website listed 125 regulatory actions under review.

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