Preemption Watch

March 23, 2005

Federal Preemption

Pay to Play Bans

New Jersey Governor James McGreevey issued Executive Order 134 in October 2004, just before stepping down in November. The order bans state agencies from awarding contracts worth more than $17,500 to any person or company that had made contributions to any gubernatorial candidate or state or local political party in the previous 18 months, and limits contributions from companies and individuals doing work for the state.

The Federal Highway Administration notified the state in November that, in its view, the restrictions violate federal regulations and could not be applied to contracts paid in whole or in part with federal aid. U.S. statutes mandate that “potential bidders may not be excluded from the competitive process for reasons not directly related to their responsibility,” and competitive bidding must exist except when there is an exception for cost effectiveness or emergency situations. FHWA argues that New Jersey had shown neither.

On January 26, acting Governor Codey signed an executive order to the effect that the provisions of E.O. 134 do not apply to DOT projects funded with federal dollars.

On February 28, the New Jersey Senate passed a bill making E.O. 134 law. Codey signed the law with a conditional veto to exempt contracts financed with federal funds.

The bill applies only to state contracts. The Senate did not act on a measure that would allow similar reforms on the local level.

Connecticut’s governor proposed similar restrictions in January 2005. State officials are now considering how the New Jersey decision might affect them. West Virginia, Ohio, Kentucky and South Carolina have measures to limit the awarding of contracts to political contributors. Local governments in New Jersey and in California have enacted their own limits, and New York City and Los Angeles are debating restrictions.

Craig Holman, the campaign finance lobbyist for the group Public Citizen, said in response to the federal circuit court decision: "This is very clearly a test case. If this decision is allowed to hold, it will have a very significant chilling effect on the pay-to-play drive that has been spreading around the country at state and local levels."

More information:

Jonathan Walters, “Good Deed, Punished,” Governing, March 2005.

Agriculture

The Second Circuit Court of Appeals ruled in February 2005 that EPA’s rules for concentrated animal feeding operations (CAFOs) violate the Clean Water Act by exempting CAFOs from meeting water quality standards. The rules, enacted in 2003, allowed CAFOs to store liquid manure in pits, then apply large amounts of manure to land without federal, state, or local oversight.

More information:

Waterkeeper Alliance