Arizona’s Intrastate Battle To Regulate Dark Money Spending
April 13, 2016
By: Will Cooke
The regulation of political activity in Arizona took a contentious turn over the summer of 2015. What began as a disputed fine levied against an independent group known as the Legacy Foundation Action Fund after the 2014 gubernatorial election, now pits two prominent regulatory agencies against each other in a battle over the regulation of independent expenditures and the groups who run them. The ad in question focused its criticism on the U.S. Conference of Mayors and its president, Scott Smith. Though the ad ran in multiple states across the country, its message proved especially relevant for Arizonans who were considering Scott Smith, then the mayor of Mesa, AZ, as a candidate for governor in the Republican Primary. Shortly after the election, the Citizens Clean Elections Commission determined the ad constituted an “independent expenditure” advocating for the defeat of Scott Smith and imposed a $95k fine on the Foundation for failing to disclose their spending as a campaign expense.
For background, the Citizens Clean Election Commission is a group created by a 1998 ballot initiative known as the Clean Elections Act. The commission’s stated goal is to “ensure every Arizona citizen the opportunity to run for office” by providing education materials to inform the electorate and administering public funds to candidates in need. By creating a level playing field, the Commission hopes Arizonans will develop greater confidence in the state’s political process and the resultant integrity of the elected government. The Commission’s authority, as they explain, includes both rule-making and the enforcement of Arizona statutes.
The latter authority now forms the basis of the current dispute. Arizona’s Secretary of State, Michele Reagan, filed a motion to intervene in the litigation to protest the Citizen Clean Election’s authority to regulate independent expenditures by outside groups prior to an election. As the Secretary’s brief explains—“Secretary Reagan seeks to intervene to prevent the [Commission] from usurping the Secretary of State’s statutory authority over independent expenditures, and to prevent the unconstitutional regulation of issue advertising in conflict with the Secretary’s statutory authority.” Importantly, to further highlight the significance of the dispute, the Secretary disagrees that the Legacy’s ad meets the requirements of an independent expenditure.
By way of statutory interpretation, the Secretary argues that the Commission’s enforcement of independent expenditures creates an unsustainable overlapping of enforcement. Pursuant to A.R.S. § 16-914.02(B), the Secretary of State serves as the “filing officer for registrations and notifications for independent expenditures in statewide and legislative directions.” This provision, according to the Secretary’s brief, accords with a larger statutory framework that gives the Secretary the power to enforce regulations related to political activity. Alternatively, the Commission derives its authority from the Clean Elections Act. One provision of the act, C.R.S. § 16-941(D), grants the Commission with the authority to mandate “any person who makes independent expenditures related to a particular office cumulatively exceeding five hundred dollars in an election cycle” to file a report with the Secretary of State. For violation of this provision, the Commission may impose a fine commiserate with the amount of unreported expenditure funding in relation to other campaign spending limits. Needless to say—their calculations can prove highly burdensome.
Secretary Reagan further bolsters her argument by pointing to a 2011 Supreme Court decision that clarified the scope of the Commission’s authority. In Arizona Free Enter. Club’s Freedom Club PAC v. Bennett, the Court struck down the Commission’s ability to consider outside group spending when calculating matching funds for an opposing candidate. These calculations, the court held, implicated an unconstitutional infringement on political speech. The effects of this decision may be far reaching. Prior to the decision, the Commission could permissibly inquire about independent expenditures. The Court’s decision, however, effectively eviscerated much of the Commission’s regulatory authority as it relates to matching funds. As Secretary Reagan argues, this decision supports her contention that the Commission now lacks any authority to decide the parameters of an independent expenditure.
The merits of the motion to intervene proved largely irrelevant. Shortly after the Secretary filed her motion to intervene, the judge for the Maricopa Superior Court remanded the case to an appellate court to review an administrative law judge’s decision to uphold the fine. While the case at bar may enlighten on the arguably ambiguous definition of an “independent expenditure,” the case’s legacy in the state will likely surround the growing dispute between the Secretary of State and The Citizens Clean Election Commission. On November 3, the Commission poured more fire on the flame when it adopted a rule that defined “political committee”—a rule that the Secretary already warns “just brought yourself a lawsuit.” Things could get even uglier from here. Stay tuned to see how the state decides to settle this administrative headache.