Clean Elections Commission delays vote on ‘dark money’ rule revisions

The Citizens Clean Elections Commission will hold off for two months on approving a proposed anti-dark money rule so the public can consider changes that strips out what many opponents viewed as its most onerous provision.

Several people and groups submitted proposed revisions after the commission’s July meeting over the rule change, including the Arizona Chamber of Commerce and Industry and former Commissioner Louis Hoffman. Tom Collins, the commission’s executive director, drew up his revised proposal based on some of the chamber’s suggestions.

But it was attorney Kory Langhofer’s proposal that the commission opted for. Representing the Center for Competitive Politics, a Virginia-based nonprofit group that opposes campaign finance disclosure laws, Langhofer submitted a counterproposal the day before the Aug. 20 meeting that he said will clarify the rule.

“What the chamber proposed was fine, except it didn’t get into a lot of specifics,” Collins told the Arizona Capitol Times. “What Kory’s proposal does … is pulls out the assumptions that are baked into the chamber’s proposal, as modified by mine.”

The proposed rule that the commission was considering would clarify a 2015 law that redefined “political committee” in Arizona’s election law statutes. The new definition, written in response to a federal judge’s December ruling that the preexisting one was unconstitutional, created a two-part test for determining whether a group is a political committee that is subject to registration and disclosure requirements. A group must raise or spend at least $500 for the purpose of influencing an election, and must be formed or conducted with the primary purpose of electioneering.

Under the commission’s proposal, any group that met the $500 threshold would be considered to have the primary purpose of influencing elections, and would be able to rebut that presumption through clear and convincing evidence. That didn’t sit well with business groups, the Secretary of State’s Office and others, who argued that the commission was reducing a two-part test to a one-part test and putting the burden on organizations to prove that they weren’t breaking the law.

Langhofer’s proposal would change the way the commission determines a group’s primary purpose. Instead of presuming that the primary purpose is influencing elections with the $500 threshold, the Langhofer plan states that the commission shall not consider a group to be a political committee unless more than half of its expenditures in a two-year campaign cycle are used to influence elections. Expenditures made in federal or out-of-state races would not count toward that total.

Furthermore, the plan would take into consideration whether a group’s grants to other organizations should be considered as political spending. It exempts such grants from being considered as such if they take reasonable steps to ensure that the money won’t be used for electioneering.

Langhofer described that provision as essentially closing a loophole often used by 501(c)(4) nonprofit organizations, which are barred by federal tax law from having the primary purpose of influencing elections. The attorney said such groups often contribute money to other nonprofits, which is then spent on elections, though the groups can claim it simply as a grant to another nonprofit so it won’t count as election spending.

“When the last dollar’s spent, the majority of the dollars are actually spent on elections,” Langhofer told the Capitol Times. “This proposed rule would keep that from happening.”

Finally, the proposal places the burden of proof on the commission for showing that a group is a political committee, not on the group to show that it’s not. The Langhofer plan states that the commission must show by a preponderance of evidence the group is a political committee.

FUNDAMENTAL DISAGREEMENT
The plan could make the commission’s rule easier to swallow for business groups, the Secretary of State’s Office and others who opposed it. But opposition will continue due to a deeper, fundamental disagreement over whether the commission has the authority to enforce such a rule at all.

The Secretary of State’s Office has long argued that the commission is acting outside the bounds of its authority by regulating non-Clean Elections candidates and independent expenditure committees that spend in races that don’t involve Clean Elections candidates. The commission claims jurisdiction under the 1998 Citizens Clean Elections Act.

Secretary of State Michele Reagan spoke at the meeting to express her opposition to the commission’s “troubling” direction. Reagan told the commission that she understands why it wants to pass such a rule and believes its desire stems from noble intentions. But the authority the commission wants can only be granted by the Legislature or the voters, she said.

“A ‘yes’ vote today by your own commission to what I believe is expanding your own authority bypasses both,” she said.

Reagan said she doesn’t want to fight with the commission and would rather work with Clean Elections. But she emphasized that she will defend the jurisdiction of the Secretary of State’s Office and its role as the state’s election regulator. She wouldn’t say whether she’ll sue the commission if it passes the rule, but said that option is on the table.

“I’m asking you sincerely to tread lightly with your decision today,” she said.

For the first time, the Attorney General’s Office, which represents both the commission and the Secretary of State’s Office, also weighed in on the proposal. Michael Bailey, who serves as chief deputy and chief of staff to Attorney General Mark Brnovich, said the commission historically did not exercise authority over non-Clean Elections candidates or independent expenditures until 2013, and urged it not to start now.

“I don’t mean to sound harsh, but we would strongly encourage you not to choose which rule over the next 60 days, but to choose no rule,” Bailey said.

Eric Spencer, the secretary of state’s elections director, said after the meeting that the Langhofer proposal would lessen the impact that the commission’s proposed rule would have on businesses, which is good for them and good for free speech rights. He also applauded the commission’s decision to circulate the rule for a full 60 days.

But Spencer said the Langhofer proposal doesn’t settle the conflict over jurisdiction or the likelihood that people will engage in “forum shopping” between the commission and the Secretary of State’s Office when considering filing complaints over election spending.

“We’re going to oppose that with as much force as the original proposal that was on the table,” he said of the new proposal.

The commission will also circulate two other proposals for 60 days, including several provisions aimed at settling questions that will arise if both the commission and the secretary of state claim jurisdiction over a case. Collins said he has proposed several solutions. One, which he crafted in response to the Chamber of Commerce, would require the commission to check with the Secretary of State’s Office to determine whether it considered a group as a political committee. If not, he or a future executive director would have to receive an affirmative vote from the commission to continue an inquiry.

Another issue the commission will take up after 60 days is a request submitted by the Secretary of State’s Office. That request asks that the commission strike from its rules a reference to a campaign finance statute on independent expenditure reporting over which the secretary of state exercises exclusive jurisdiction, which would essentially take such enforcement out of the commission’s hands.

For procedural reasons, the commission scheduled an Aug. 21 meeting to initiate proceedings on that request.