Colo. Supreme Court strikes down campaign finance restrictions

Earlier this week the Colorado Supreme Court struck down a controversial “pay-to-play” law. The Court ruled that Amendment 54, enacted by referendum in 2008 as a state constitutional amendment, violated the First Amendment to the U.S. Constitution.

Covington & Burling LLP issued an excellent analysis of the ruling today:

A diverse group of plaintiffs-including the chancellor of a state university, a board member of a nonprofit corporation, a labor union, and a local city council member-argued that this law violated the First Amendment by excessively burdening their right to political expression via political contributions. The Supreme Court held that significant portions of the law were unconstitutionally overbroad, including the complete ban (as opposed to a cap) upon contributions that reached to all levels of government regardless of a recipient’s ability to influence contract awards or a recipient’s relationship with the contractor.

The memo also considered broader implications for “pay-to-play” statutes in other jurisdictions:

Despite this sweeping defeat for Colorado’s pay-to-play law, we expect that states will continue to enact and enforce pay-to-play laws. Statewide pay-to-play laws in Connecticut and New Jersey recently withstood First Amendment challenges on the basis that the interest in preventing corruption and its appearance was heightened in light of recent scandal in those states. Targeted pay-to-play laws in Louisiana (aimed at casinos) and Georgia (aimed at insurance companies) as well as federal pay-to-play laws and regulations that apply to government contractors, brokers, and dealers of municipal securities also have withstood constitutional challenge. The Supreme Court of Colorado’s opinion reinforces the idea that states and courts may consider a properly crafted pay-to-play law to be an appropriate means to mitigate political corruption and quid pro quos in politics.

InvestmentNews reported on questions surrounding a pending Securities Exchange Commission pay-to-play rulemaking setting federal restrictions on contributions to state and local officials responsible for awarding bonding contracts.

My comments in that story were a less articulate explanation of what Covington & Burlington noted: narrow direct contribution restrictions on a targeted class of donors backed up by a compelling government interest have generally withstood judicial scrutiny.

The Denver Post and Associated Press published reports about the Colorado case, Dallman v. Ritter. The Daily Sentinel editorialized in favor of the decision: “Free speech wins over Amendment 54”

The state spent 16 months and $100,000 to defend the unconstitutional law, according to the Post—not even counting the potential attorney fees for the plaintiffs.