Judge dismisses lawsuit against dark money law, but legal challenges remain
Conservative groups aiming to strike down a new Arizona law forcing the disclosure of anonymous political donors suffered a setback last week, but the battle is far from over.
Last year, more than 70% of Arizonans cast their ballots in support of Proposition 211, the Voters’ Right to Know Act. The act seeks to eliminate anonymous “dark money” in politics by requiring that committees spending at least $50,000 in statewide or legislative campaigns reveal the identities of individual contributors who give $5,000 or more. Those who give $2,500 or more to a committee spending at least $25,000 in a local election would likewise face the disclosure of their names, mailing addresses, jobs and employers.
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Claiming the law violated their free speech rights, the Arizona Free Enterprise Club and Center for Arizona Policy quickly challenged the law in court. Both the Free Enterprise Club and Center for Arizona Policy Action are 501(c)(4) nonprofits, which allows them to engage in political activity and fundraise, though federal tax rules say that such groups cannot engage in political activity as a primary purpose.
Such nonprofits, known colloquially as dark money organizations, can both spend directly on political efforts or give their money to registered political committees, often with no limits. Committees that receive money from nonprofits must report the name of the 501(c)(4) that sent them the money, but they historically haven’t been required to disclose where the funds originally came from.
Attorneys for the two groups argued in court that the disclosure requirements in Prop. 211 violated free speech protections because it would deter donors who are afraid of being judged for their political beliefs. The Center for Arizona Policy, in particular, is a frequent proponent of anti-LGBTQ and anti-abortion laws.
But on June 22, Maricopa County Superior Court Judge Scott McCoy dismissed the lawsuit, noting that the public interest in transparency outweighs the risk of forfeited donations.
“The Court recognizes the importance of ‘the First Amendment’s purpose: to protect unpopular individuals from retaliation — and their ideas from suppression — at the hand of an intolerant society,’” McCoy wrote, citing previous rulings. “But the Court may not ‘ignore the competing First Amendment interests of individual citizens seeking to make informed choices in the political marketplace.’”
McCoy also pointed out that mechanisms to avoid disclosure and protect political contributors are already baked into the act. Donors can simply give less to ensure the disclosure provision isn’t triggered, sign a form that ensures the money isn’t spent on campaign media messages or political ads, or apply for an exemption if they believe they or their families are at risk of physical harm if their personal information is revealed.
While McCoy dismissed the lawsuit, he also left an opening for the groups to revise their argument and bring an amended challenge focused on how the law is applied — a tall bar to meet, given that the Arizona Citizen’s Clean Elections Commission is still in the process of developing enforcement guidelines and the deadline for an amended complaint is July 7.
Scott Day Freeman, a senior attorney at the Goldwater Institute, the libertarian think tank and legal center that represented the two organizations, said the possibility of launching a renewed attempt is still being considered.
“The court recognized that Prop. 211 may violate the free speech and associational rights of our nonprofit clients and their supporters,” he wrote in an emailed statement. “Our clients and all Arizonans have a right to support the causes they believe in free from harassment, intimidation, and government interference. We are reviewing the decision to determine how best to protect the constitutional rights of our clients, and other Arizonans.”
A similar effort at the federal level filed in March by Americans for Prosperity, another conservative heavyweight in anonymous campaign spending, is still looming. Proponents of Prop. 211 warn that it is likely on its way to the U.S. Supreme Court, which in the past has ruled to block government limits on independent expenditure committees.
Anonymous political spending has exploded since the U.S. Supreme Court’s 2010 ruling that the government cannot restrict independent expenditures for political campaigns by corporations, including nonprofit corporations, labor unions, and other associations. That ruling also held that disclosure of political spending “enables the electorate to make informed decisions and give proper weight to different speakers and messages.”