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‘Pay to Play’ Fix Is Backed by House

A single sentence added to the pending highway bill sets a precedent for how the federal government deals with state anti-corruption laws, potentially influencing campaign finance laws even more than the McCain-Feingold reforms did, according to some campaign finance experts and the lawmaker who proposed the amendment.

Rep. Bill Pascrell (D-N.J.), with support from other Members from his state’s delegation, offered the measure to protect a New Jersey “pay to play” law that bans potential state highway contractors from donating money to the campaigns of gubernatorial candidates and state or county parties.

Pascrell’s legislative push came after the Federal Highway Administration had refused the state about $250 million in funds because of the state’s pay-to-play rules. Pascrell’s amendment — which was included in the House’s version of the highway bill that passed last week — gives New Jersey and any state the ability to enact anti-corruption laws and still get their federal cash.

Several other states, including South Carolina, Ohio and West Virginia, have similar rules to curb “pay to play” practices.

“I felt the Federal Highway Administration was wrong in their interpretation,” said Pascrell in an interview. “We want to change the federal law so all states can enact tougher pay-to-play laws.”

Brett Kappel, a campaign finance lawyer and lobbyist at Vorys, Sater, Seymour and Pease, said the amendment “opens up a second front on campaign reform … one that is more solidly based on the constitution.”

He added, “This is the first time you see the Congress taking a step in favor of ‘pay to play.’ It’s an early indication of a new form of campaign finance reform. Over the next few years, if this passes without any objection in the Senate, then it becomes the model for the next time there is a similar problem.”

The pay-for-play laws in New Jersey and other states ban or limit state and local political donations of employees who work for companies that bid for government contracts. The term “pay for play” was coined to reflect the idea that would-be contractors had to pay political donations in order to “play” in the contracting realm.

“It has very significant ramifications for other states,” said Craig Holman, legislative representative at Public Citizen.

Celia Wexler, vice president for advocacy at Common Cause, said the Pascrell amendment gives states cover to take on corruption through the pay-for-play laws.

“I think it just gives states that want to do something on pay to play some comfort that the highway administration isn’t going to yank funds,” she said.

By giving an apparent federal blessing to a type of campaign finance restriction that had been used sparingly at the federal level, Congress could signal a willingness to encourage more anti-pay-to-play legislation in the future.

Ken Gross, a campaign finance and ethics partner at Skadden Arps Slate Meagher and Flom, said, “I think there are ways of reforming contributions through the back door, and this is one of them. Certainly it will have a material effect on contributions.”

Pascrell said that if his amendment opens the door to other federal contracts beyond highway funds, “then so be it.”

Pascrell, who attracted support from Reps. Bob Menendez (D-N.J.) and Frank LoBiondo (R-N.J.), said he was intimately involved in pushing this measure through Congress.

Typically, he said, “I’m more interested in the results, but I had to get involved in the process. It was behind-the-scenes appealing to people’s good senses.”

Initially, Pascrell had offered the amendment in the House Transportation and Infrastructure Committee, but later withdrew it after promises that the bill would address the New Jersey issue. Then, last week, Pascrell, presented the amendment to the House Rules Committee, which allowed it to go to the floor for a voice vote. It passed on Thursday.

The Senate Environment and Public Works Committee plans to mark up the highway bill on Wednesday. And there, the Pascrell amendment seems to be in good hands. A spokesman for Sen. Frank Lautenberg (D-N.J.) said that Lautenberg planned to offer in the Senate a companion amendment to the House’s Pascrell provision during the markup on Wednesday. With allies like Lautenberg and Sen. Jon Corzine (D-N.J.), Pascrell said he is confident the amendment will remain in the final version of the highway bill.

Groups such as Public Citizen and Common Cause, which wrote letters to Members lobbying for the amendment, had geared up for a more sustained push but said it went through more quickly than they anticipated.

“Some of what we wanted to do in terms of lobbying, well, this moved too fast,” said Wexler of Common Cause, which co-signed a letter supporting the measure. “The letter was important. And the fact that it was a bipartisan amendment made a lot of difference. It wasn’t a hard sell. Really Members of Congress are sensitive when it looks like a federal agency is interfering with a state. … The amendment is pretty simple. Seems like a no-brainer.”

Public Citizen’s Holman said the Transportation and Infrastructure Committee doesn’t normally come under his campaign finance scope. But, he said, “a bunch of us realized that the transportation committee was debating the federal highway authorization bill, which normally has nothing to do with campaign finance, so I’m not usually paying attention to that. Congressman Pascrell went ahead to push for this and a lot of groups and organizations joined on board, sent in letters and made some phone calls.”

Campaign finance experts say the courts have upheld a similar, but narrower, pay-to-play-type law that regulates the donations of companies that underwrite municipal bonds. But, Gross said, just because that rule has been upheld doesn’t mean that all such rules will be.

“It is on the cusp of encroaching on First Amendment activity, and these rules need to be very tight and cannot chill activity,” he said. “There is merit to the rule, but there is devil in the detail.”

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