Battle Royale over ‘dark money’ brewing in Arizona

Arizona Secretary of State Michele Reagan duped voters last year into believing that she cared about “dark money” campaign disclosures (I warned you that she was lying).

Since having been elected to office, Reagan has not only done nothing to address “dark money” campaign disclosures but she has now come to the conclusion that — surprise! — “my office does not have authority” to regulate dark money campaign disclosures. Reagan: ‘Dark money’ disclosure can’t happen.

If the Secretary of State, the principal election officer in Arizona, doesn’t have authority to regulate “dark money” campaign disclosures, then who does?

In Arizona we have the Citizens Clean Elections Commission, enacted by a citizens initiative, something we know that Republican office holders hate after having tried to kill the Citizens Clean Elections Commission for years.

The Commission says it has the authority to regulate “dark money” disclosures and is proposing a rule to do something about it.

Secretary of State Michele Reagan, who refuses to do anything about “dark money” campaign disclosures says “Uh-uh, no way! I am the Queen of elections in Arizona! I am the law!” So it looks as if we are headed for a battle royale over “dark money” campaign disclosures in Arizona.

Still lurking out there is Terry Goddard’s “dark money” campaign disclosure initiative by VPA Arizona yet to be filed.

The Arizona Capitol Times (subscription required) reports, Clean Elections holds dark money rule, but passage likely:

The Citizens Clean Elections Commission will wait a month before voting on a rule that would force disclosure from “dark money” groups that spend money to influence Arizona elections. But the commission appears likely to approve the proposal over the objections of Secretary of State’s Office and the business community.

Under the rule change, the commission would consider any group that spends or raises at least $500 to influence an election as a political committee, which would trigger requirements that it disclose its contributors. Groups would have the opportunity to rebut that presumption through “clear and convincing evidence.”

State law defines a political committee as an entity that spends at least $500 on elections and has the primary purpose of influencing elections.

The commission on Thursday delayed the vote on approving the final rule until its Aug. 20 meeting because it changed the original version it unveiled in May, which would have used the timing of a group’s formation to determine its primary purpose. Considering that change, Thomas Koester, the commission chairman, said it would be appropriate to take another month to get public comment.

However, Koester left little doubt as to what he expects to happen at the next meeting.

“I think we’re all in agreement to adopt (the rule), but again put it out until the next commission meeting,” he said.

The two-hour meeting was dominated by fundamental disagreements over the rule itself and the commission’s authority to pass it in the first place. Over the past two years, the commission has repeatedly clashed with the Secretary of State’s Office and others over the authority it has asserted over candidates and committees that are privately funded and don’t participate in the Clean Elections System.

Eric Spencer, the state election director at the Secretary of State’s Office, urged the commission to voluntarily cede campaign finance enforcement authority it has claimed over the past two years and end the “cold war” between the two entities.

Meanwhile, members of the commission urged the Secretary of State’s Office to use the next 28 days to provide input on how the commission should define “primary purpose,” rather than simply dispute the commission’s regulatory authority.

Neither side appears likely to get what it wants.

Spencer told the commission that the Secretary of State’s Office will not submit a counterproposal on how to define “primary purpose” because it is the only entity authorized under state law to make that determination.

“Not in any way, shape or form,” will Reagan’s office participate in helping the commission craft the rule, Spencer told reporters after the meeting.

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During the 2015 session, the Legislature approved a new definition of “political committee” with a two-part test: it must raise or spend at least $500 to influence an election, and it must be created, combined or conducted with the primary purpose of doing so. Statute says both prongs must be met before a group is considered to be a political committee subject to reporting requirements.

Spencer argued that the commission is reducing the law to a one-part test.

“It in a circular way defines someone’s primary purpose as the fact that they spent or raised $500. They’re collapsing what is a two-part statutory test into a circular definition with a one-part test,” he said.

That presumption could require organizations that spend dark money – anonymous contributions that can’t be traced back to a donor – on independent expenditures to publicly disclose the source of their funds. Many dark money groups are 501(c)(4) nonprofit organizations, whose primary purpose under federal law cannot be to influence elections. But they are often accused of being used for such purposes anyway.

Opponents also criticized the proposal for putting the burden of proving that a group is not a political committee on the group itself. Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry, said the proposal would force honest and law-abiding businesses to justify their primary purpose before the commission for exercising their constitutional free speech rights in elections.

Yes, he said that with a straight face. The “dark money” organizations that chamber members fund anonymously are all a bunch of Boy Scouts. Glenn Hamer vouches for them. An often-overlooked part of the Citizens United decision actually upheld disclosure requirements, so Hamer’s free speech argument about disclosure is B.S. 

“The new proposed rule appears to put the onus on businesses to prove by clear and convincing evidence that they have not violated the rules,” Hamer said. “This burden-shifting contradicts accepted notions of fairness and due process.”

Collins argued that seeking an exemption from the commission’s reporting requirements is not burdensome. He noted that during the 2014 election cycle, about 20 groups successfully sought exemptions from the commission, including at least one that is opposing the current proposal.

“Never heard from those folks ever again. They signed the exemption. They went away,” Collins said. “The exemption is on its face not a burden. It’s the opposite of a burden.”

Opponents warned that if the commission passed the proposed rule, litigation would be inevitable.

“You’ve bought yourself a lawsuit,” Spencer told the commission.

But of course, this is Arizona where we cannot do anything rational and  reasonable through legislation, everything must be litigated in the courts.

Critics of the proposal made it clear, however, that their greater objection was the commission’s claim of authority to actually pass or enforce such a regulation. Spencer said the commission has claimed overlapping authority in campaign finance regulation that rightfully belongs to the Secretary of State’s Office.

But the Secretary of State said she does not have authority to regulate “dark money” campaign disclosures. Reagan: ‘Dark money’ disclosure can’t happen. So where’s the conflict here?

Referring to one 2014 case, he pointed out that the commission levied a fine against a group called the Legacy Foundation Action Fund after other regulators designated by the Secretary of State’s Office determined it hadn’t broken any campaign finance laws. More recently, the commission pursued an investigation against a group called Veterans for a Strong America after the Secretary of State’s Office forwarded the same case to the Attorney General’s Office for investigation. Both are dark money groups that do not disclose their contributors.

Oh, so the conflict is that the Secretary of State wants to give “dark money” organizations a pass and not require them to do anything, but the Clean Elections Commission wants to live up to its namesake and function by actually doing something about “clean elections” in Arizona. The Commission is showing up a Secretary of State who is derelict in performing her duties. Now I see it.

The result of that overlapping authority, Spencer said, has been increasing chaos. Furthermore, he said the conflict has severely strained the relationship between the secretary of state and the commission, which historically had a strong working relationship.

“There is a Cold War developing between your commission and the Secretary of State’s Office,” Spencer said.

Oooh, them are fightin’ words!

Spencer said there are only two ways to resolve the crisis. Either Clean Elections’ allies must put a ballot measure before the voters so they can determine who has authority over campaign finance matters, or one side must “step back from the brink.” He made clear that it was the commission that must take the step back.

That’s your cue, Terry Goddard. File your “dark money” campaign disclosure initiative and start circulating petitions.

The commission has been adamant that the 1998 Citizens Clean Elections Act, which created the commission and the public campaign funding system it oversees, grants it the authority to enforce campaign finances laws against all candidates and committees. The revised version of the proposed rule was crafted by former Commissioner Louis Hoffman, one of the drafters of the 1998 Citizens Clean Elections Act.

Rather than continually question the commission’s authority, Collins and Koester emphasized that this is an opportunity for the Secretary of State’s Office to work with the commission.

“Hopefully we’d get some constructive input, not saying whether I’m for it or against it, but maybe something more,” Koester said. “We can’t do much if all we get is, ‘You shouldn’t do anything.’”

Newly appointed Commissioner Mark Kimble, for whom Thursday was his first meeting, reiterated that point, saying he was “not encouraged” by Spencer’s Cold War rhetoric.

It’s not going to happen. As I said, Reagan’s position is “Uh-uh, no way! I am the Queen of elections in Arizona! I am the law!” She does not recognize the legitimacy of the Citizens Clean Elections Commission. Republicans have been trying to kill the Commission for years. I fully expect to see yet another bill in the next legislative session proposing to do away with the Commission, and it will have the backing of the Secretary of State.

I have advocated for an independent citizens election commission to oversee elections in Arizona. Take elections out of the Secretary of State’s office entirely. That office has for too many years been used to engage in partisan abuses. Since we already have a Citizens Clean Elections Commission, this would be the logical place to start. It will have to be done by citizens initiative, because our lawless Tea-Publican Arizona legislature will never do it.

What have you got, Terry Goddard?