Appeals court upholds Arizona's anti-dark-money law

In a divided opinion, the 9th Circuit Court of Appeals rejected a series of arguments by Americans for Prosperity that Proposition 211 and its mandate to shine a light on "dark money'' in campaigns infringes on the free speech rights of the organization and the people who give it money.

"For the electorate to make informed decisions about candidates for office or issues placed on a ballot measure, it is essential that the public be given information as to where political campaign money comes from and how it is spent,'' wrote Judge Johnnie Rawlinson, writing for the majority of the three-judge panel.

"The disclosure of relevant information about the donors and backers of political causes alerts the voters to the interests to which the candidate is most likely to be responsive,'' he wrote, saying it allows the public to "give proper weight to different speakers and messages and make informed choices in the political marketplace.''

Rawlinson also pointed out that before Prop. 211, Arizona laws required only that the name of the donating group be made public. Now, he said, voters are informed of who is really behind an organization that may have an innocent-sounding name but may, in fact, be funded by special interests.

Wednesday's ruling drew a dissent from Judge Patrick Bumatay, who said the right to anonymous speech is protected by the First Amendment.

He said that is what allowed people to publish anonymous pamphlets and writings, a tradition that goes back to the Revolution, citing "Common Sense'' written by Thomas Paine and the writings of Alexander Hamilton, John Jay and James Madison in "Publius'' debating the merits of independence from Britain and ratification of the Constitution.

Rawlinson rejected that comparison.

"Notably absent from the dissent is any evidence of a historical tradition of anonymous donations to political campaigns,'' he wrote. "The dissent offers no evidence that the Founding generation regarded anonymous campaign donations as an exercise of free speech protected by the First Amendment.''

How voters changed the law 

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

More to the point, it says those organizations must 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 must 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. 

What Prop. 211 was designed to address is that under the law at that time, only the name of the group that bought the advertisement or commercial had to be disclosed. That could mean voters learned only that an organization with a name like "Arizonans for Arizona'' spent money to influence their votes — with no clue who formed that group nor who were its major donors.

Voters got a dose of that in 2014. That year, 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  Pinnacle West Capital Corp., APS' parent company, admitted it was the one that had funneled $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.

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

And that wasn't the end of the company's hidden 2014 campaign spending.

All that was cited in the successful campaign for Prop. 211.

Not a violation of free speech rights

In filing suit, Americans for Prosperity argued the First Amendment protects the rights of individuals to donate to advocacy organizations without fear their identities would be disclosed. They claimed Proposition 211 "trammels that right by subjecting countless Americans nationwide to governmental doxxing for doing nothing more than supporting their chosen non-profit organizations and charities.''

But Rawlinson, in Wednesday's ruling, said what makes the Arizona law constitutional — and not an abridgment of free speech rights — is that it does not limit how much anyone can spend.

He said that was the essence of the ruling in Citizens United, a 2010 U.S. Supreme Court ruling that voided limits on who can spend money seeking to influence elections and how much. But at the same time, Rawlinson said, the high court upheld requirements for public disclosure.

"Disclosure ... can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters,'' wrote Justice Anthony Kennedy for the majority.

Rawlinson said the same is true here.

"Proposition 211 seeks to assist Arizona voters in making informed election decisions by securing their right to know the source of monies used to influence Arizona elections,'' he wrote.

"One of the obstacles to an informed electorate is the use of 'dark money' in politics,'' Rawlinson said, essentially "the practice of laundering political contributions, often through multiple intermediaries, to hide the original source of campaign media expenditures.''

"The original source disclosure requirement is substantially related to the state's interest in ensuring that the public receives accurate information about the sources of campaign media spending in Arizona elections,'' Rawlinson said. That supersedes any burden Prop. 211 places on those who are forced to comply, he said.

There was no immediate response from Americans for Prosperity.

Other court cases 

This isn't the first time courts have rejected arguments about the legality of Prop. 211.

In two separate rulings, the Arizona Supreme Court previously upheld the essential provisions of Prop. 211 and the requirement for disclosure. But those two cases remain alive over side issues.

One issue is whether voters were entitled to give the Citizens Clean Elections Commission the power to make rules.

Republican lawmakers contend that provision in Prop. 211 unconstitutionally strips away their authority. But Arizona Supreme Court Justice Clint Bolick said even if that provision is nullified, that doesn't void the entire measure and its disclosure requirements.

The other is a claim by the Free Enterprise Club and the Center for Arizona Policy, both of which have sought for years to affect election outcomes, that they are entitled to special exemptions. They contend the disclosure requirements would result in harassment of their donors.

But a ruling in their favor would still leave the provisions of Prop. 211 intact for every other organization.