AG’s Office: Corporations may donate to IE groups

The Attorney General’s Office won’t go after corporations and labor groups that donate to independent expenditure committees, despite its position that state law prohibits such contributions.

In a letter to conservative think tank Goldwater Institute, Solicitor General Mary O’Grady said the office “intends to exercise its prosecutorial direction not to prosecute” corporations and unions if they donate to independent expenditure groups during the next few weeks of the general election campaign.

O’Grady cited several reasons for the decision, including potential constitutional challenges against the prohibition, the likelihood of the Arizona Legislature clarifying the issue next year and current practices by political committees of reporting all contributions they receive, which satisfy the state’s interest in public disclosure.

The Attorney General made the decision after the Goldwater Institute demanded that the government office stop enforcing an election law on campaign spending and retract its position that corporations and labor groups may not donate to political committees.

The government office earlier emphasized in a letter to the Secretary of State that corporations and labor groups that violate the law risk a class 2 misdemeanor.

In a letter to the Attorney General’s Office, the Goldwater Institute said the U.S. Supreme Court’s ruling in Citizens United means that corporations and labor groups cannot be barred from making an independent expenditure to expressly advocate for or against a candidate, and they also cannot be prohibited from financing an independent expenditure through making a contribution.

The legal back-and-forth between the Institute and the Attorney General stemmed from questions arising from the passage of a state law implementing the Citizens United ruling.

Under this law, corporations and labor groups may engage in electioneering – meaning they can directly spend on political advertisements to influence an election – but they must report expenses to the Secretary of State if they reach certain thresholds.

But the law is silent about whether corporations and labor groups may donate to political committees as opposed to spending directly for or against a candidate.

This and other technical questions led the Secretary of State to formally ask the Attorney General’s Office to clarify how to implement the new statute.

The Goldwater Institute was reacting to the Attorney General’s responses to the Secretary of State.

Corporations have lamented that the election law has or would chill their First Amendment right to raise and spend money on independent expenditures, the Institute said.

This is where it gets a little tricky. The new law implementing Citizens United did not actually completely eliminate an existing ban against corporations from making contributions to influence an election.

Instead, the new law carves out an exemption — that is, corporations are still prohibited from spending or making a contribution except as provided for by the statutory amendments aimed at implementing Citizens United.

The Institute’s letter, penned by attorney Nick Dranias, carried a subtle threat: Now that they have been notified of the “well-established unconstitutionality” of the law prohibiting corporations from making contributions, employees of the Attorney General may lose immunity if they still enforced it.

O’Grady answered in kind.

“If you do not agree with the statutory approach, perhaps the best course would be for you to talk to your legislators about possible amendments that might be proposed during the next legislative session,” O’Grady said.

The Solicitor General also said the Institute’s letter has no basis for its sweeping assertion that A.R.S. 16.919 — sections A to C — is unconstitutional.

To contrary, the constitutionality of the state law is “well-established,” O’Grady said.

Despite the legal show down — through correspondence, this time — the Goldwater Institute is claiming victory.

“Without filing a lawsuit, the Goldwater Institute has scored another victory for First Amendment rights as businesses, non-profit corporations and unions are now free to support or oppose candidates in the Nov. 2 general election by making donations to independent expenditure committees,” the group said.