Arizona Supreme Court considers arguments that voter-approved dark money law is unconstitutional

The Arizona Supreme Court is giving groups that support Republicans one last chance to prove that they can hide the names of their donors — even if their money is being used to influence elections.

In a brief order, the justices said they will consider a claim by the Center for Arizona Policy and the Arizona Free Enterprise Club that disclosure laws approved by voters in 2022 run afoul of the free speech clause of the state constitution. Attorneys for the Goldwater Institute, representing both groups, contend that provision provides even broader individual protections than the First Amendment of the U.S. Constitution.

More to the point, they argue that language precludes the state from forcing the disclosure of the names of those who give money to those groups, money they then can use in turn to campaign for or against not just candidates but also ballot measures.

Despite the court’s decision to let Goldwater make the argument, that doesn’t necessarily mean the justices will overturn two prior rulings by lower courts which found there’s nothing unconstitutional about the law. It takes only three of the seven justices to decide they’d like to take a look; Goldwater needs to convince four that the law is unconstitutional.

Approved by voters in 2022 by a nearly 3-1 margin, the Proposition 211 initiative says that any organization that spends more than $50,000 on a statewide race — half that for other contests — has to publicly disclose anyone who has given at least $5,000.

More to the point, it says organizations have to trace the money back to the original source.

It has been the law for years that the names of people who donate directly to campaigns have to be publicly disclosed.

But there has been an increasing use of “independent expenditures” to affect the outcome of elections. Put simply, any organization can spend whatever it wants to elect a governor or defeat a ballot measure. And the name of that organization and how much it spent does become public.

What Prop 211 was designed to address is that what had to be divulged was only the name of that group. So that could mean voters learn only that an organization with a name like “Arizonans for Arizona” spent money to influence their votes — with no clue who formed that group and no clue to who are the major donors.

Voters got a dose of that in 2014.

That year, the several groups put $10.7 million into successful efforts to elect Republicans Tom Forese and Doug Little to the Arizona Corporation Commission, the panel that determines how much utilities can charge their customers.

Three years later, the commission approved a 4.5% rate hike for Arizona Public Service.

But it wasn’t until 2019 that the Pinnacle West Capital Corp., APS’ parent company, admitted was the one that had given $5.9 million to the Free Enterprise Club and another $3.5 million into an organization called Save Our Future Now, money the company conceded went into influencing the commission rate.

Pinnacle West also disclosed giving nearly $1.4 million to the Arizona Cattle Feeders Association, also money that a company spokeswoman said was spent on that same race.

That, however, was not the end of the company’s hidden 2014 campaign spending.

It was later discovered Pinnacle West also gave $50,000 to the Republican Governors Association which helped the first election of Doug Ducey as governor. And there was $425,000 to the Republican Attorneys General Association, which in turn bought commercials to help elect former Attorney General Mark Brnovich.

The problem with Prop 211, according to the Goldwater Institute, is how it affects the right of privacy.

“In this political climate, privacy for Americans associating with unpopular viewpoints and policies is, in may circumstances, indispensable to protect free speech and preserve freedom of association,” the organization’s lawyers argued in their petition to the Supreme Court.

With Prop 211, the Secretary of State’s Office must publish the names, addresses, occupations and employment of every intermediate donor, the people giving to groups like the Free Enterprise Club and the Center for Arizona Policy.

The Goldwater Institute is advancing a series of legal theories about why the justices should void the law, ranging from what it says is an “unconstitutionally vague” definition of what constitutes campaign media spending to whether the disclosure requirement can result in threats or harassment, both of the organizations spending the money as well as the people who have provided the cash.

But the heart of the argument goes to the claim that requiring the disclosure runs afoul of the right of privacy, a right that the Goldwater Institute provides heightened protections against state action.

The Arizona Constitution spells out that “every person may freely speak, write, and publish on all subjects, being responsible for the abuse of that right.”

Of note is that the Arizona Supreme Court has repeatedly ruled in other cases that language is broader than what’s in the First Amendment of the U.S. Constitution. Applicable to what’s at issue here, it spells out “Congress shall make now law ... abridging the freedom of speech.”

Andrew Gould, one of the lawyers for Goldwater, said that is significant — and relevant to the future of Prop 211.

“The authors of the state constitution intended to protect the right to donate to ballot initiative campaigns and the right not to have one’s ‘private affairs’ made public by the government,” he said in a statement released by Goldwater. “This law violates both those promises and says that if you donate to a nonprofit group that supports or opposes a ballot initiative, the government’s going to paint a target on your back.”

That, however, may be insufficient to have Prop 211 voided.

Attorneys for Goldwater made those same arguments about the broader protections in the Arizona Constitution when the case went to the state Court of Appeals. But Judge Jennifer Campbell said that is legally irrelevant.

“Nothing suggests that the Arizona Constitution provides enhanced campaign finance disclosure protections,” she wrote last year for the unanimous three-judge panel. In fact, Campbell said, that document would seem to say otherwise, quoting a provision directing the Legislature enact a disclosure law to publicize “all campaign contributions to and expenditure of campaign committees and candidates for public office.”

“By expressly mandating the disclosure of campaign contributions, the framers of the Arizona Constitution in fact highlighted an intent to compel the disclosure of the identities of persons and groups contributing money to influence elections,” she wrote.

But attorney Timothy Sandefur of the Goldwater Institute, said that, despite what Cambell wrote, that constitutional provision actually supports at least part of the argument against Prop 211. He said that language specifically mentions only “candidates for public office,” saying that means it excludes money spent for or against ballot measures.

Campbell rejected claims that constitutional mandate to lawmakers verbiage covers only direct contributions to candidates and campaigns, not money that is given to third parties to spend on races. She said challengers presented no evidence to back that claim, saying it is clear that the constitutional provision on disclosure was “designed to fight corruption and undue influences.”

Finally, the appellate court said nothing in Prop 211 limits free speech or any campaign-related activities.

And there’s something else.

Campbell said individuals are free to associate anonymously with groups like those challenging the law.

“The association only becomes public if the donor chooses to allow their contributions to be used for political media campaigns,” she wrote.

No date has been set for the high court to consider the arguments.