NJ 'dark money' law faces first lawsuit challenging requirement to name secret donors

A libertarian advocacy nonprofit filed a federal lawsuit Tuesday challenging New Jersey's newly signed "dark money" law that requires political groups to reveal their big-spending funders, legislation Gov. Phil Murphy signed despite earlier vetoing the bill and calling it "unconstitutional."

Americans for Prosperity, a group founded by megadonor brothers David and Charles Koch, asked a federal judge for the U.S. District Court of New Jersey to prevent New Jersey officials from enforcing the law until the suit is decided and to declare the law unconstitutional. 

“All Americans should be free under the First Amendment to choose how to share their beliefs," Americans for Prosperity said in a statement. "This legislation could erode those foundational freedoms — making it harder for people to engage on the issues they’re passionate about, exposing them to potential retaliation, and, in doing so, insulating politicians from critique."

The law would require 501(c)(4) political nonprofits, like Americans for Prosperity, and 527 political organizations to report all funders that give more than $10,000 or spend more than $3,000.

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Americans for Prosperity says the law goes too far, beyond typical campaign finance rules that cover only election-related ads. New Jersey will now also make groups report funders for ads on ballot measures, legislation and policy-making, which grassroots groups say will prevent people from donating to them. 

Murphy signed the campaign finance bill in June, despite previously vetoing the exact same legislation and calling it "unconstitutional." 

"I am concerned that extending the disclosure requirements to cover advocacy that is not connected to an issue before the electorate may infringe upon constitutionally protected speech and association rights," Murphy said in a message after signing the bill. "Additionally, I remain concerned that various apparent drafting errors in the bill may invite confusion among filers and could spawn time-consuming litigation."

Governor Phil Murphy leaves the press conference on the New Jersey state budget on Tuesday, June 18, 2019, in Trenton.

Murphy's reversal came after the Democratic-controlled Legislature appeared to have the votes to overturn his conditional veto, which would have been the first in two decades. Murphy said he struck a deal with lawmakers to quickly pass a "cleanup bill," which Assemblyman Andrew Zwicker, D-Somerset, introduced, but the legislation has not been considered in any committee or on either chamber floor. The bill would tie the rules more closely to election-related speech and take out the requirements for groups airing ads on issues and regulations. 

Senate President Stephen Sweeney, D-Gloucester, said there wasn't any reason to make a deal with Murphy, and that he had the votes to overturn Murphy's veto.

"All I’ve said is if there’s any unintended consequences, then we would adjust it,” Sweeney told the Star-Ledger

The agency that would enforce the new law, New Jersey's Election Law Enforcement Commission, declined to speak about pending litigation. Attorney general spokesman Lee Moore also declined to comment on behalf of the office.

In the lawsuit, the nonprofit said the new law, which would first show previously secret donors in January 2020, would bring danger to its supporters. 

"Americans for Prosperity's views are not universally popular, and experience has, unfortunately, shown that its donors will face threats, harassment, and reprisals if their names are publicly disclosed," the lawsuit said. "Those supporters ... who have become publicly known (either by choice or otherwise) have faced repercussions ranging from threats to kill or maim to boycotts, firings, and public shaming."

Americans for Prosperity has been involved in multiple cases about secret donors, such as in California, where the group's foundation arm is suing over a requirement to reveal donors to the state, but not the public. 

But even good-government groups have expressed concern about how far New Jersey's law reaches. 

"In elections, voters need to know donors so they decide who to vote for and what interests are behind candidates, so they can hold them accountable for spending money on their behalf," said Ian Vandewalker, counsel for the nonpartisan, nonprofit Brennan Center for Justice, which researches elections and voting rights issues. "But elections are special, and in the lobbying context, where nonprofits might be grassroots members getting together to appeal to the government for a specific policy, the same considerations don't apply."

The liberal American Civil Liberties Union has also threatened a legal challenge to the law if a cleanup bill is not passed

After years of inaction, New Jersey's "dark money" bill sped through the Legislature earlier this year in the midst of a feud between Murphy and Sweeney. 

A nonprofit called New Direction New Jersey, which is stacked with former Murphy aides and for which the governor raises money and appears in ads, went back on a previous promise to reveal its funders. In response, Sweeney pushed the bill forward and legislators added amendments, such as expanding the reach to cover lobbying activities that Americans for Prosperity dislikes.