ASSOCIATED INDUSTRIES OF KENTUCKY, Appellant, v. COMMONWEALTH of Kentucky; Chris Gorman, Attorney General, Commonwealth of Kentucky; George E. Barker, Chair, Kentucky Legislative Ethics Commission; Livingston Taylor, Chairman, Executive Branch Ethics Commission, Appellees.
No. 95-SC-53-TG.
Supreme Court of Kentucky.
Dec. 21, 1995.
912 S.W.2d 947
Chris Gorman, Attorney General, William B. Pettus, Assistant Attorney General, Office of Attorney General, Susan Gormley Tipton, Michael A. Bennett, Kentucky Legislative Ethics Comm., Lori Flanery, Executive Branch Ethics Comm., Frankfort, for appellees.
REYNOLDS, Justice.
The Kentucky Code of Legislative Ethics and the Executive Branch Code of Ethics are challenged as being unconstitutional under the Constitutions of both Kentucky and the United States.
This action was initiated in Franklin Circuit Court by the Associated Industries of Kentucky, which is a statewide association of employers who do business in this state with the purpose of providing a wide range of services relating to legislative and governmental affairs. It actively supports legislation that is intended to benefit Kentucky businesses. The Association (AIK) is exempt from taxation under Section 501(c) of the Internal Revenue Code. The appellees (defendants below) are the Commonwealth of Kentucky, the Attorney General, and the respective chairmen of both the Legislative
AIK‘s claims arise from the 1993 legislative enactment of
For the agents (lobbyists) and their employers, there is created by the legislation a number of requirements relative to their registration, disclosure of interest, and reporting of activities. The registration, disclosure, and reporting requirements, as well as conduct prohibitions, are enforceable by civil and criminal penalties. Under this legislation, AIK is designated as an employer of persons who engage in lobbying activities with the legislative and executive branches of state government. These employees, while engaged, are referred to as “lobbyists,” whether engaged within the legislative branch or the executive branch.
Kentucky‘s public scandal involving the indictment and conviction of legislators, former legislators, and lobbyists for criminal misconduct prompted/hastened the enactment of Senate Bill 7 during the first extraordinary session of 1993. Such legislation made changes to KRS Chapters 6 and 11A which are referred to as the “Kentucky Code of Legislative Ethics” and the “Executive Branch Code of Ethics.” Appellant‘s declaratory judgment action, commenced in December of 1993, challenged 24 provisions of the legislation as being unconstitutional under the federal and Kentucky constitutions. The provisions which include equal protection, right of petition, right of association and due process were challenged for vagueness or overbreadth.
LACK OF A JUSTICIABLE CONTROVERSY
We agree that the trial court correctly declined to address appellant‘s issue that asserted that the fines and criminal penalties which can be imposed under the legislative and executive codes for failure to properly register, report and/or disclose information violates its First Amendment rights of association and petition. This record does not disclose an actual and justiciable controversy upon this issue to be pending before the court. Appellant, as required, is duly registered with the respective commissions and no proceeding (adjudicatory/investigatory) is disclosed to be pending at this time. A determination of the validity of the challenged statutory penalties is speculative. We consider
We further agree that the trial court correctly refused, on jurisdictional grounds, to consider appellant‘s challenge to the expenditure reporting requirements relating to lobbyists’ reports and the no campaign contributions requirement. The legislative agents (the affected parties) are not before the court.
Appellant maintains that it had standing to challenge the expenditure reporting requirements and the prohibition against campaign expenditures applicable to its employees. Further, appellant maintains that it was the vagueness of the personal expenditure concept which was applicable to both the employer and to the agents which caused it to challenge the expenditure reporting requirements of
Franklin Circuit Court lacked jurisdiction to decide the constitutionality of statutory provisions which affected only lobbyists since no real controversy existed as presented by the pleadings. Revis v. Daugherty, supra; Commonwealth v. Winchester Water Works Co., 303 Ky. 420, 197 S.W.2d 771 (1946). All expenditure reporting requirements of
CONSTITUTIONAL RIGHTS OF FREEDOM OF ASSOCIATION AND FREEDOM OF PETITION
The provisions of
REGISTRATION, DISCLOSURE AND REPORTING REQUIREMENTS, INCLUDING PROHIBITIONS AGAINST DEFINED CONDUCT
Appellant‘s attack upon
The federal legislative history of lobbying statutes made an appearance in 1852 and 1867 to exclude from the floor of Congress those newspaper persons and former congressmen acting as lobbyists. Within a decade, lobbyists were required to register their identification with the house clerk. Practices such as bribery and large campaign contributions were curtailed by legislation. The Federal Corrupt Practices Act of 1925 (18 U.S.C., Section 2) required a legislator to divulge any campaign contribution in excess of $100, and the names and addresses of contributors. Such was the predecessor, in form, to the present Federal Regulation of Lobbying Act (FRLA). Regulation of lobbying activities, by several of the states, was directed primarily at what was essentially deemed to be corruption. In some instances, the magnitude of the problems prompted incorporation pertaining to lobbying provisions into state constitutions; i.e., New Hampshire, Alabama, Georgia, and California. At present, more than 30 states have statutes requiring various types of disclosure by lobbyists.
One of AIK‘s basic positions is that the fundamental constitutional rights to freedom of association and freedom of petition, guaranteed by the First Amendment to the United States Constitution and Section 1 of the Kentucky Constitution, are impacted by the Code of Ethics legislation. All parties agree with the premise that the First Amendment to the United States Constitution and Section 1 of the Kentucky Constitution are designed to protect the rights of citizens in a democratic society to participate in the political process of self-government. The United States Constitution, by the First Amendment, provides, “Congress shall make no law ... abridging the right of the people to petition the Government for a redress of grievances.” This Amendment becomes applicable to the states through the Due Process Clause of the Fourteenth Amendment to the United States Constitution. The Kentucky Constitution separately heralds the protection of these rights by the provisions of Section 1 of the Kentucky Constitution:
All men are, by nature, free and equal, and have certain inherent and inalienable rights, among which may be reckoned:
Fourth: The right of freely communicating their thoughts and opinions.
Sixth: The right of assembling together in a peaceable manner for their common good, and of applying to those invested with the power of government for redress of grievances or other proper purposes, by petition, address or remonstrance.
AIK‘s specific arguments include broad attacks upon the statutory reporting and disclosure scheme imposed upon it by this legislation. It relies upon both constitutions, supplemented with the statement that the most fundamental protection of Kentucky citizens comes from its own constitution, with the United States Constitution serving as a floor. Kentucky is free to interpret its own constitution and afford its citizenry rights of petition and association in excess of those which are federally guaranteed. The conduct prohibited by
The trial court‘s standard of “strict scrutiny” to review any abridgement of plaintiff‘s First Amendment rights was utilized herein. NAACP, supra; Buckley, supra; and Federal Election Comm‘n v. National Right to Work Comm., 459 U.S. 197, 207, 103 S.Ct. 552, 559, 74 L.Ed.2d 364, 375 (1982). The challenged legislation requires similar information to that challenged in Buckley, supra, and reflects a limited infringement of AIK‘s First Amendment rights of association and petition. The federal lobbying controls discussed in United States v. Harriss, 347 U.S. 612, 74 S.Ct. 808, 98 L.Ed. 989 (1954), predate the concept of associational privacy. The United States Supreme Court in NAACP v. Alabama, supra, fashioned a test to measure state actions which would impact upon associational privacy wherein the state must demonstrate a controlling interest in the disclosure requirements; and secondly, must prove that a substantial relationship exists between the state‘s interest and the information to be gained by disclosure. Bates v. City of Little Rock, 361 U.S. 516, 80 S.Ct. 412, 4 L.Ed.2d 480 (1960). The Kentucky legislative acts, however, do not compel disclosure of membership in organizations engaged in advocacy and, therein, develops the emergence of deference and minimum of restriction.
Although the legislation burdens the exercise of fundamental rights, the rights may yield where there is a subordinately governmental interest that is compelling. McDonald v. Smith, 472 U.S. 479, 105 S.Ct. 2787, 86 L.Ed.2d 384 (1985). To assess encroachments upon a basic constitutional right, a three-prong inquiry determines: First, does a statute pose a significant burden on a constitutional right? Secondly, does the statute further compel state interest? Thirdly, if so, does the statute further that interest too broadly, or in the alternative is the statute narrowly tailored to protect that interest? Buckley v. Valeo, supra. Buckley, 424 U.S. at 25, 96 S.Ct. at 638 provides:
Yet, it is clear that “[n]either the right to associate nor the right to participate in political activities is absolute.” ... Even a “‘significant interference’ with protected rights of political association” may be sustained if the State demonstrates a sufficiently important interest and employs means closely drawn to avoid unnecessary abridgement of associational freedoms. (Citations omitted.)
Additionally:
The strict test established by NAACP v. Alabama is necessary because compelled disclosure has the potential for substantially infringing the exercise of First Amendment rights. But we have acknowledged that there are governmental interests sufficiently important to outweigh the possibility of infringement, particularly when the “free functioning of our national institutions” is involved. (Citations omitted.)
Buckley, 424 U.S. at 65, 96 S.Ct. at 657.
The Commonwealth of Kentucky has a compelling interest in insuring the proper operation of a democratic government and deterring corruption, as well as the appearance of corruption. This, we hold, is demonstrative of the most important of interests and employs means, closely drawn, to avoid unnecessary abridgement of associational freedom.
We determine that the legislation does not violate the United States Constitution although a theorist may correctly assert that under Kentucky‘s Constitution the rights of association and petition may not be absolutely synonymous with that of the federal constitution. We are not convinced in this case that the freedoms of petition and association under the Kentucky Constitution should be afforded a broader scope or a different analysis than the corresponding rights under the United States Constitution. Commonwealth v. Foley, Ky., 798 S.W.2d 947, 953 (1990).
While there is an absence of state authority relative to identical treatment as to the corresponding rights of association and petition under Section 1(6) of the Kentucky Constitution and that of the United States Constitution, there is a similarity between
RIGHT TO LOBBY ANONYMOUSLY
Appellant has acknowledged that the trial court identified the correct legal standard when scrutinizing the abridgement of associational rights. We find no demonstration or explanation as to how there has been a misapplication of the regulation at hand. Anonymous lobbying is an age-old practice and a prohibition of such lobbying without the requirement that lobbyists divulge their identity and that of their employers through registration is not a new or novel concept. The problems arising with special interest groups and lobbyists were foretold by James Madison who advised that their registration should be a primary task of legislation. Lobbying has developed into a sophisticated enterprise as for example:
Faithful legislators were rewarded with substantial campaign contributions, and, in the case of their recalcitrant colleagues, the contribution would be given to their opponents. Furthermore, lobbyists often enlisted the assistance of an important institution in the home state or district of a wavering senator or congressman. (Footnote omitted.)
Comment, Public Disclosure of Lobbyists’ Activities, 38 Fordham Law Review 524, 525 (1970).
This state, in 1916, enacted a Lobbyist Act requiring lobbyists to disclose their identity and expenditures. Additionally, the Act prohibited contingent compensation and, within limited bounds, imposed some restriction on a lobbyist‘s activities. Criminal penalties were provided for violations of the Act. Campbell v. Commonwealth, 229 Ky. 264, 17 S.W.2d 227 (1929). Irrespective of appellant‘s argument, the right to employ lobbyists without being identified was not upheld in McIntyre v. Ohio Elections Commission, 514 U.S. 334, 115 S.Ct. 1511, 131 L.Ed.2d 426 (1995). McIntyre upheld, in that circumstance, the right of anonymous pamphleteering in the context of a referendum. Buckley, supra, justified compelled record keeping by candidates of even small campaign contributions and, to date, there is cited no state or federal court case which proclaims that lobbyists or their employers have a right to remain anonymous when attempting to influence legislators.
We decline to hold that the registration, reporting and disclosure provisions of the two codes are an impermissible burden on the members’ freedom of association and right to petition. Here the executive lobbyists and legislative agents (lobbyists) and their employers must indicate in the registration statements the real party in interest and on whose behalf the lobbying is taking place. See
The information required to be disclosed under these statutes exhibits a substantial relationship between the state‘s compelling interest and the information to be disclosed. Reasonable disclosure requirements would appear to be the least restrictive means of curbing the evils that the legislature found to exist. Buckley, 424 U.S. at 67, 96 S.Ct. at 658. The reasoning in Buckley, which applied to campaign corruption, is most applicable to this case.
Kentucky‘s compelling interest as to this legislation was directed at regulating both legislators and lobbyists. The definitive purpose is set forth in
The proper operation of democratic government requires that a public official be independent and impartial; that government policy and decisions be made through the established processes of government; that a public official not use public office to obtain private benefits; that a public official avoid action which creates the appearance of using public office to obtain a benefit; and that the public have confidence in the integrity of its government and public officials.
The Kentucky General Assembly enunciated its findings and declarations relating to legislative lobbying in
(1) The operation of open and responsible government requires the fullest opportunity to be afforded to the people to petition their government for the redress of grievances and to express freely their opinions on executive and legislative action.
(2) The identity and expenditures of certain persons who attempt to influence executive and legislative actions should be publicly identified and regulated to preserve and maintain the integrity of government.
The regulation of lobbyists carries with it the state‘s interest which provides a benefit to the government, the legislators, and the public. Such a reasoning is amplified by A.C.L.U. of New Jersey v. New Jersey Election Law Enforcement Comm‘n, 509 F.Supp. 1123, 1129 (D.N.J.1981) which states:
First, disclosure ... permits legislators to evaluate whether the interest of a particular constituency is consistent with the interests of other constituencies.
Second, regulation of lobbying serves the needs of the electorate. “The voting public should be able to evaluate the performance of their elected officials in terms of representation of the electors’ interest in contradistinction to those interests represented by lobbyists.”
Third, the state has a strong interest in promoting openness in the system by which its laws are created. (Citations omitted.)
The purpose and the function of the codes are not to restrict or prohibit appropriate and protected communications of the lobbyists. To the contrary, the effect of these sections requires only that one who receives compensation and/or expends funds in lobbying must register and report the nature and extent of his activities in a particular regard. Fritz, supra. The Court holds that the legislation‘s narrowing of its scope to the influence of money upon governmental processes results in a degree of avoidance of unconstitutional restrictions upon the ambit of the guarantees of the First Amendment.
The appellee has included within its arguments reference to sections of the statute which the trial court did not address/rule upon; i.e.,
CONSTITUTIONAL EQUAL PROTECTION RIGHTS
As the codes regulate compensated lobbyists only and do not include individuals or
The appellant also invokes the equal protection clause of the Federal and State Constitutions. He asserts that, in prohibiting only persons “employed for a pecuniary consideration” to represent citizens in legislative matters from going upon the floor of either house of the General Assembly while in session, the act makes an arbitrary, unreasonable, and capricious classification, contrary to the Fourteenth Amendment of the Federal Constitution, and subsections 4 and 29 of section 59 of the Constitution of Kentucky.... “[W]e start with the general consideration that a state may classify with reference to the evil to be prevented, and that if the class discriminated against is or reasonably might be considered to define those from whom the evil mainly is to be feared, it properly may be picked out. A lack of abstract symmetry does not matter. The question is a practical one, dependent upon experience.... The state ‘may direct its law against what it deems the evil as it actually exists without covering the whole field of possible abuses.‘” (Citations omitted.)
There is a similarity existing between Section 308 of the FRLA which requires a person who engages themselves for compensation to attempt to influence legislation before Congress to registration, disclosure and reporting, and, on the other hand, those persons who attempt to influence legislation but do not receive consideration for doing so are not required to register or file reports. Harriss, supra. Federal Election Comm‘n v. National Right to Work Committee, 459 U.S. 197, 103 S.Ct. 552, 74 L.Ed.2d 364 (1982), provided for the appropriateness and justification of regulations that treated corporations, unions and similar organizations differently from individuals. Based upon the legislature‘s recent experiences, the General Assembly drafted legislation which treated paid lobbyists differently from private citizens and unpaid lobbyists. It was specifically determined by the legislature that there was a need to properly identify and regulate compensated lobbyists in order to preserve and maintain the integrity of government.
CONSTITUTIONAL VAGUENESS AND RIGHT TO DUE PROCESS
The trial court, as we have stated, declined to adjudicate the constitutionality of
Accordingly, we affirm the judgment of the Franklin Circuit Court and specifically uphold the constitutionality of
STEPHENS, C.J., concurs in part and dissents in part by separate opinion.
STEPHENS, Chief Justice, concurring in part and dissenting in part.
It is a well settled and often repeated principle in Kentucky jurisprudence that “[i]n order to have standing to bring a lawsuit, the plaintiff must have a judicially recognizable interest in the subject matter of the suit and a present or substantial interest therein.” Housing Authority of Louisville v. Service Employees International Union, Local 557, Ky., 885 S.W.2d 692, 695 (1994). In recognition of the subjective nature of this standard, we have held that “[t]he issue of standing is one which is to be decided on the facts of each case.” Rose v. Council for Better Education, Inc., Ky., 790 S.W.2d 186, 202 (1989).
Utilizing this standard it is readily apparent that AIK has standing to challenge the statutes which affect individual lobbyists; specifically, the prohibition against working as treasurer in
I agree with the majority‘s conclusion that the expenditure reporting requirements of
This Court has interpreted these sections as providing the citizens of the Commonwealth with equal protection under the laws of this state. See, Kentucky Harlan Coal Co. v. Holmes, Ky., 872 S.W.2d 446 (1994); Commonwealth v. Wasson, Ky., 842 S.W.2d 487 (1992). With the enactment of the Code of Ethics, the legislature chose to discriminate between paid and unpaid lobbyists. This choice created “a separate and identifiable class for Kentucky constitutional law analysis because no class of persons can be discriminated against under the Kentucky Constitution.” Wasson, 842 S.W.2d at 500. The exception to that rule arises when “there is a substantial government interest, a rational basis, for different treatment.” Id.
The majority has correctly pointed out that the legislature has a compelling interest in preserving and maintaining the integrity of the government. However, there is no rational basis for denying an individual, whose occupation is as a lobbyist, the opportunity to serve as a campaign treasurer or fundraiser
The criminalization of lobbying on a contingent fee basis defies reason. By including
The regulation of a lawful business is dependant upon some reasonable necessity for the protection of health, safety, morality, or other phase of the general welfare, and unless an act restricting the ordinary occupations of life can be said to bear some reasonable relation to one or more of these general objects of the police power, it is repugnant to constitutional guarantees and void.
There can be no “reasonable necessity” for this prohibition especially in the face of the long standing tradition of contingent legal fees.
Finally, these restrictions are violative of § 2 of the Kentucky Constitution as an exercise of arbitrary power. The above noted reasoning applies as well to this analysis. If there is no rational basis for the exercise of power, then it is by definition arbitrary and thus constitutionally infirm. This Court has determined that “arbitrary” consists of “whatever is essentially unjust and unequal or exceeds the reasonable and legitimate interests of the people.” Kentucky Milk Marketing v. Kroger Co., Ky., 691 S.W.2d 893, 899 (1985). Furthermore, if the governmental “action taken rests upon reasons so unsubstantial or the consequences are so unjust as to work a hardship, judicial power may be interposed to protect the rights of persons adversely affected.” Id. These restrictions on paid lobbyists are just such a circumstance and this Court has the duty to invalidate the prohibitions found in
For the foregoing reasons, I am dissenting in part and concurring in part from the majority opinion. I would hold that AIK has standing to challenge the statutes which affect their employees and would invalidate the above mentioned sections.