Welcome to The Disclosure Digest, a monthly look at state and federal disclosure policies for nonprofit organizations and their donors.
Arizona Court of Appeals upholds donor privacy law
On Sept. 29, a three-judge panel of the Arizona Court of Appeals unanimously
upheld provisions of a 2016 law that exclude some tax-exempt entities from registration and donor disclosure requirements under the state's campaign finance laws.
What is at issue?
Enacted in 2016, SB1516 repealed the term "political committee" from the state's campaign finance laws, replacing it with the new term "committee." Under the original statute, a political committee was defined, in part, as "a candidate or any association or combination of persons that is organized, conducted, or combined for the purpose of influencing the result of any election." The replacement term, "committee," was more narrowly defined as "a candidate committee, a political action committee, or a political party."
SB1516 also explicitly excludes tax-exempt groups organized under Section 501(a) of the Internal Revenue Code from earlier campaign finance reporting and donor disclosure requirements. This exclusion applies to groups that are "not organized for the primary purpose of influencing an election."
The Arizona Advocacy Network (AAN) sued the state, arguing that SB1516 violated Arizona's Voter Protection Act (VPA), which requires the legislature to approve legislation amending or superseding the VPA with a three-fourths majority in each chamber. The House and Senate approved SB1516 by votes of 31-27 and 18-10, respectively, falling below the three-fourths threshold. AAN describes itself as a nonprofit that aims "to protect and strengthen disclosure requirements and other rules that curtail the rapidly-increasing influence of mega-donors and special interests. We are holding the line against dangerous attacks on our courts."
Judge David Palmer of the Maricopa County Superior Court ruled in favor of AAN, finding that SB1516 "effectively amend[s] the [VPA] by altering key definitions." The state appealed Palmer's decision to the Arizona Court of Appeals.
How did the court rule?
Judges David Gass, Lawrence Winthrop, and Maria Elena Cruz voted unanimously to reverse the lower court's decision on the disputed
points. Writing for the court, Gass said:
Appellees argue SB1516’s exemption will undermine the Act because far fewer entities are required to register and file campaign-finance reports. The Act originally defined 'political committee' to include an entity even if it 'may be part of a larger association, combination of persons or sponsoring organization not primarily organized, conducted or combined for the purpose of influencing the result of any election.' … By excluding tax-exempt entities, SB1516 limited the scope of the registration and filing requirements as they existed in 1998. Significantly, nothing in SB1516 changes any substantive registration or reporting
requirements imposed by the Act.
Judges Gass and Cruz were appointed to the court by Gov. Doug Ducey (R). Judge Winthrop was appointed by Gov. Jane Dee Hull (R).
About the Arizona Court of Appeals
The Arizona Court of Appeals is the state's intermediate appellate court, considering appeals of decisions made by lower state courts. The court's 22 judges are appointed by the governor from lists of nominees prepared by the Arizona Commission on Appellate Court Appointments. Every six years, judges must stand in retention elections in order to continue serving on the court. Litigants can appeal decisions made by the Arizona Court of Appeals to the Arizona Supreme Court, the highest court in the state.
What are the reactions, and what comes next?
Joel Edman, AAN's executive director, said the ruling had given "the seal of approval to various legal loopholes created by the Arizona legislature for the sake of allowing unlimited amounts of corporate money to flow into our elections." An attorney for AAN said the group had not yet decided whether it would appeal the ruling to the state supreme court.
Neither Secretary of State Katie Hobbs (D) nor Attorney General Mark Brnovich (R) have publicly commented on the lawsuit's outcome.
What we've been reading
- The Wall Street Journal,
"Justice Ginsburg and the Value of Anonymity," Oct. 15, 2020
- Fox News, "Arizona appeals
court ruling on 'dark money' raises risk of political corruption, critics say," Oct. 2, 2020
- Providence Journal, "Judge
upholds R.I. campaign finance law; conservative groups appeal," Sept. 29, 2020
The big picture
Number of relevant bills by state: We're currently tracking 53 pieces of legislation dealing with donor disclosure. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we're tracking.
Number of relevant bills by current legislative status:
Number of relevant bills by partisan status of sponsor(s):
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