Arizona’s Campaign Finance Limits Remain Unclear as Election Approaches

As candidates for legislative and statewide elected offices in Arizona are gearing up for the 2014 elections, a crucial yet unanswered question looms over the proceedings: how much money are candidates allowed to accept from campaign donors? In attempting to clarify the answer, the Arizona Court of Appeals held last month that House Bill 2593 was ineffective because it had not been passed with a supermajority as required by the Arizona Constitution.¹ In doing so, the Arizona Court of Appeals ruled in favor of the Clean Elections Commission and against the Speaker of the House and President of the Senate. House Bill 2593, signed into law last spring, overrode existing campaign contribution limits by increasing the maximum contribution that political campaigns could accept from individual supporters. With the enjoinment of the new law, the previous, stricter, campaign contribution requirements are once again the law of Arizona—unless the Arizona Supreme Court steps in.

FACTS

The underlying dispute traces its genesis to the 1998 state general election.² In that election, the voters of Arizona passed two ballot measures by popular referendum: Proposition 200, known as the Clean Elections Act;³ and Proposition 105, commonly referred to as the Voter Protection Act.⁴

The voters were clear on what they intended to accomplish with the Clean Elections Act: lessen money’s influence on politics. The ballot language expressed a goal of “diminishing the influence of special-interest money,” and found the then-current system “discourage[ed] otherwise qualified candidates who lack personal wealth.” In response to these financial pressures, “elected officials spend too much of their time raising funds rather than representing the public.”⁵ In response to the many concerns, the Clean Elections Act provided public campaign financing to political candidates running for statewide and legislative offices as long as participating candidates agreed to limit their fundraising to within certain levels. Candidates who declined to participate in the public financing system (“nonparticipating candidates”) were subjected to spending caps.⁶ Instead of specifying absolute caps as dollar amounts for these nonparticipating candidates, the Clean Elections Act tied its restrictions to Arizona’s existing campaign contribution statute, A.R.S. § 16–905 (“section 905”). The Clean Elections Act capped spending for nonparticipating candidates at 20% less than the dollar amount specified in section 905, subject to annual increases for inflation.⁷ The two statutes thus are tied together; neither has independent meaning without the other.⁸

The second 1998 measure, the Voter Protection Act, was enacted to prevent “back room manipulation of election results”⁹ by politicians unhappy with voter referenda outcomes. The Voter Protection Act made it more difficult for the Legislature to modify referenda passed by Arizona voters.¹⁰ Specifically, the Voter Protection Act mandated that the legislature could only amend voter referenda as long as any proposed changes would “further the purpose” of the voters and further required that any amendments pass by a three-fourths supermajority of delegates in each legislative body.¹¹ The Voter Protection Act was accordingly added to the Arizona Constitution as Article 4, § 1(6) and is still in full effect today.

In the spring of 2013, the state legislature passed H.B. 2593, which was subsequently signed into law by Governor Jan Brewer.¹² The law amended section 905 by drastically increasing the maximum contribution that nonparticipating candidates could accept, but it did not directly amend the voter-enacted 20% reduction requirement in the Clean Elections Act. Thus, even though legislators only technically amended section 905, in practical terms they also increased the Clean Elections Act limits because of the unusual way the two statutes are tied together; a change in one initiates a synchronized change in the other.

This created a perplexing problem: according to the Voter Protection Act, the Clean Elections Act could only be changed if it was furthering the intent of the voters—patently not the case here, where voters intended to lessen contribution limits and legislators voted to raise them. In addition, the amendment must be passed by a supermajority consisting of three-fourths of legislators in both chambers. A simple majority, however, passed H.B. 2593.¹³ By any measure, it clearly fails the test enacted by the Voter Protection Act.

But does the Voter Protection Act apply to the contribution caps at all? After all, section 905 itself was not passed by voter referendum. Even if the Voter Protection Act does not apply here, can politicians skirt the protections given to voter-enacted measures by amending the only part of the contribution limit laws that wasn’t passed by voters—even though it functionally changes everything? Either way, in light of the political tinkering regarding contribution limits enacted by the will of the people, the Voter Protection Act suddenly seems a prescient move on the part of Arizona voters.

PROCEDURAL HISTORY

In July 2013, Plaintiff Arizona Citizens Clean Elections Commission brought suit against the Arizona Secretary of State, seeking to enjoin H.B. 2593 on the grounds it was unconstitutional for a simple but powerful reason—it functionally amended a voter-initiated referendum without the Voter Protection Act’s requirement of a three-fourths super majority. The President of the Senate and Speaker of the House of Representatives joined the Secretary.

In response, the President and Speaker argued that the Voter Protection Act does not apply to H.B. 2593 because the Legislature did not directly amend the voter-enacted Clean Elections Act, but rather the section 905 caps.¹⁴ Additionally, they asserted the affirmative defense that raising the limits in H.B. 2593 was necessary because the then-current Clean Elections Act limits were unconstitutionally low and thus violated the First Amendment’s¹⁵ free speech protection.¹⁶

The Superior Court agreed that the Voter Protection Act does not apply to section 905 because that statute was not passed by voter referendum, and the fact that it is tied to a voter-enacted law does not fundamentally change how it may be amended.¹⁷ The Superior Court thus declined to issue a preliminary injunction. The Superior Court also noted that “First-Amendment issues” factored into the decision not to enjoin H.B. 2593. The Superior Court did not elaborate further on which First Amendment issues were troubling, nor did it attempt to develop a factual record from which to analyze any possible free speech issues.¹⁸

The Clean Elections Commission appealed the Superior Court’s decision, and the Court of Appeals overturned.¹⁹ The Court of Appeals agreed with the Clean Elections Commission that the Voter Protection Act applies to the section 905 limits because they were incorporated by reference into the Clean Elections Act. Their analysis applied traditional tools of statutory construction to the Clean Elections Act and the Voter Protection Act and found that the intent of the voters was clear. The Court of Appeals granted the injunction against H.B. 2593, barring it from taking effect and restoring the original limits as set by the Clean Elections Act. The Court of Appeals further remanded to the Superior Court for consideration of whether the stricter Clean Elections Act limits were unconstitutionally low, as the President and Speaker had argued.

On November 4, the Speaker and President appealed the decision to the Arizona Supreme Court. The Supreme Court agreed in a short minute entry to expedite briefing on the remaining issues. Response briefs for the Clean Elections Commission were due November 22, and the Supreme Court plans to consider the petition for review at conference on November 26.

ANALYSIS AND DISCUSSION

There are several approaches the Supreme Court can take to ensure that Arizona’s campaign finance caps are consistent with the intent of its citizens, the state constitution, and the First Amendment.

First, the Supreme Court can decide not to grant review of the decision and let the Court of Appeals decision stand. This would permanently designate H.B. 2593 as invalid, and the sole issue in the case before the Superior Court will be whether the resurrected Clean Elections Act limits are unconstitutionally low. The justices are most likely to do this if they agree with the Court of Appeals that the Voter Protection Act extends its protection to section 905, therefore the legislature’s attempt to amend the contribution limits through H.B. 2593 is invalid. In this way, they practice judicial economy by not relitigating an issue that the lower court got right and which does not present any pressing need for their involvement.

However, it seems likely that the Supreme Court will step in to adjudicate the case. The issue is an urgent matter of statewide importance and a final decision on the merits is critical to the integrity of the impending 2014 election cycle. Because fundraising for the 2014 midterms is already in full swing²⁰ potential candidates have filed affidavits in the case noting the confusion amongst donors and campaigns as to the legal contribution limits. Even if the Supreme Court merely affirms the reasoning and result of the Court of Appeals, a final directive is vital to clear confusion and facilitate compliance.

If the Supreme Court grants review, there are several paths for it to decide the case. The Court may choose to ignore the merits and instead focus on its procedural options. If they do so, there are three main avenues they could take.

First, after dispensing with what had ostensibly been the sole issue in the case—the legitimacy of H.B. 2593—the Court of Appeals remanded the case to the Superior Court to further explain its ambiguous reference to “First Amendment-based reasons” when it declined to reinstate the Clean Elections Act.²¹ The Court of Appeals thus reinvented the case as one about whether the Clean Election Act’s contribution limits violate the First Amendment. Because no party had officially petitioned the court to consider this issue, the Supreme Court may decide that it is not properly before the Court at all.²²

Second, even if the Supreme Court agrees with the Court of Appeals’ decision to refocus the case on the Clean Elections Act and the First Amendment,²³ standing may become an issue. At the time the suit began, the President and Speaker would not have had standing to challenge the Clean Elections Act contribution limits because they had been overridden by H.B. 2593 and thus were not effective law. They only were resurrected as effective law when the Court of Appeals enjoined H.B. 2593. Thus the Supreme Court may decide that since the party did not have standing to bring the claim in the original suit, its later individualized injury does not justify retroactively construing a defense as a separate issue.²⁴

Third, the Supreme Court could decline to issue a decision on the merits and instead clarify one procedural issue at the request of the parties: which party has the burden of proof regarding the constitutionality of the Clean Elections Act contribution limits. The Clean Elections Commission has argued that if the President and Speaker wish to challenge the constitutionality of the Clean Elections Act limits then they bear the burden of demonstrating that First Amendment free speech rights have been restricted. The President and Speaker, however, argue that since they interpret the limits as “offend[ing] the essence of a fundamental right,”²⁵ relevant precedent dictates that it is the responsibility of the Clean Elections Commission to demonstrate the constitutionality of the limits.

If deciding the case on the merits, the Court may act in one of several ways. First, and most simply, it may dispense with the Voter Protection Act-centered analysis of H.B. 2593’s validity and instead employ the constitutional avoidance doctrine to reach the same result—that H.B. 2593 is invalid.²⁶ This analysis would center on the fact that the Clean Elections Act declares its intent to be binding “notwithstanding any other law to the contrary,” thus, the Court could find that H.B. 2593 is simply contrary to constitutional principles and therefore invalid.

Second, the Court may find that since the Clean Election Act incorporated the section 905 limits by reference, it effectively froze the limits at their then-current levels. Subject only to annual adjustments for inflation as provided by law, the contribution limits would remain essentially the same from one election cycle to the next. The advantages to this interpretation of H.B. 2593 are clear: the Court can sidestep the tricky questions surrounding the Voter Protection Act’s application to other referenced statutes and avoid creating a flood of litigation resulting from uncertainty about past amendments to protected statutes.

Third, the Court could address the First Amendment issues referenced by the courts below. In doing so, it could strike down the Clean Election Act limits on First Amendment grounds by declaring the limits too low to meet the federal constitutional threshold. The test, however, is a fact-based inquiry that asks whether the contribution limits are “’closely drawn’ to match ‘sufficiently important’ government interests.”²⁷ Here, the Supreme Court would probably agree with the Court of Appeals that there is not a sufficiently developed record to make such a fact-based determination. The trial court has sole authority as fact finder, and until it fully discharges that duty, the appellate courts lack the grounds for declaring the Clean Election Act limits unconstitutionally low.

Whether the Court decides to address the case on mainly procedural grounds or addresses the merits, a key component of its ruling will be whether to continue the injunction against H.B. 2593 imposed by the Court of Appeals. Currently the injunction prevents the more expansive contribution limits from going back into effect. This has created significant uncertainty for candidates running for statewide and legislative offices in 2014; the new, higher limits were in effect for 32 days²⁸ before the Court of Appeals ordered to return to the longstanding, pre-H.B.2593 levels. Campaigns have expressed confusion as to the status of money collected during the 32-day period under the higher limits; must it ultimately be returned if it violates the maximum contribution amount decided by the court?²⁹

On one side, the Speaker and President argue that the injunction should be stayed pending a final disposition on the matter. On the other, the Clean Elections Commission argues that a continuing injunction is necessary to prevent confusion and any harm to the Arizona public that may result if H.B. 2593 is ultimately judged unconstitutional. In an interesting twist, Secretary of State Bennett has changed his position on the issue; in the lower court he argued, along with the President and Speaker, against the injunction. In papers filed with the Supreme Court, however, the Secretary now states “though [he] argued against the injunction entered below, that injunction must now remain in place to stop what has become a precarious and confusing exercise in regulatory ping pong.”³⁰ He further argued “a stay would only compound the uncertainty between and among candidates and contributors who have scrambled during the election cycle to interpret and comply with a vacillating collection of rules and regulations.”³¹ The Secretary’s comments outline the vital need for a quick, decisive ruling from Arizona courts to ensure the integrity of the impending elections.

The Supreme Court has ordered further briefing in order to decide whether to grant review to the case. A resolution of some sort will be pending from the Supreme Court over the next several weeks, hopefully providing some clarity to candidates, elected officials, and donors. Meanwhile, days tick away until the 2014 midterm elections, and every day without a decision further strands the Arizona political system in fundraising limbo.

* Sarah Gonski is a second year student at Harvard Law School. She plans to practice law in Phoenix, AZ.
¹ Ariz. Citizens Clean Elections Comm’n v. Brain, No. 1 CA-SA 13-0239, 2013 WL 5761620, at *8 (Ariz. Ct. App. 2013).
² Ariz. Citizens Clean Elections Comm’n, 2013 WL 5761620, at *1.
³ Citizens Clean Elections Act, 1999 Ariz. Sess. Laws 1942, 1942–65 (codified at ARIZ. REV. STAT. (“A.R.S.”) §§ 16–940–961).
⁴ Voter Protection Act, 1999 Ariz. Sess. Laws 1937, 1941.
⁵ Id.
⁶ Citizens Clean Elections Act, 1999 Ariz. Sess. Laws at 1944.
⁷ As an example, the individual contribution limit per election for legislative office is designated in section 905 as $488; after the 20% reduction taken by the Clean Elections Act, the limit is $440. Under H.B. 2593 the cap would have jumped to $4,000 per election. ($2,000 per “election cycle.” H.B. 2593 doubled the amount of “elections” by redefining the primary and general as separate events, making the total amount available $4,000).
⁸ As specified in A.R.S. § 16-905 (2013).
⁹ 1998 Arizona General Election Ballot, Argument for Proposition 105, Richard Mahoney (Former Secretary of State of Arizona).
¹⁰ Voter Protection Act, 1999 Ariz. Sess. Laws 1937.
¹¹ Id. at 1939. See also ARIZ. CONST. art. 4, pt. 1, § 1(6)(C), (14).
¹² 2013 Ariz. Sess. Laws, ch. 98 (1st Reg. Sess.).
¹³ Both parties explored the voters’ intent through ballot measure language, plain meaning of the statute, and other traditional tools of statutory construction. The Court of Appeals concluded that it was the clear intent of the voters to restrict the influence of money in politics by lessening contribution amounts.
¹⁴ Ariz. Citizens Clean Elections Comm’n, 2013 WL 5761620, at *3.
¹⁵ The First Amendment protects political expression in the form of monetary contributions to candidates for elected office; however, the U.S. Supreme Court has upheld contribution limits as long as they are “closely drawn” to match “sufficiently important governmental interests.” Buckley v. Valeo, 424 U.S. 1, 25 (1976). The Supreme Court has indicated that it would consider maximum contribution limits so low as to unconstitutionally restrict freedom of speech if they “prevent candidates and political committees from obtaining the resources necessary for effective advocacy, render political association ineffective, or ‘drive the sound of a candidate’s voice below the level of notice, and render contributions pointless.’” Ariz. Citizens Clean Elections Comm’n, 2013 WL 5761620, at *9 (quoting Nixon v. Shrink Mo. Gov’t PAC, 528 U.S. 377, 395–97 (2000)).
¹⁶ Intervenors’ Response to Petition for Special Action at 29, No. 1 CA-SA 13-0239 (Ariz. Ct. App. Sept. 27, 2013).
¹⁷ Ariz. Citizens Clean Elections Comm’n, 2013 WL 5761620, at *6.
¹⁸ Ariz. Citizens Clean Elections Comm’n v. Bennett, No. CV 2013-010338, (Super. Ct. Ariz. Maricopa Cnty. Sept. 11. 2013) (order denying preliminary injunction), available at http://www.courtminutes.maricopa.gov/docs/Civil/092013/m5945881.pdf.
¹⁹ Id. at *1.
²⁰ See generally Robert Robb, Uncertain Election Rules May Hobble Dems, AZCENTRAL (Nov. 22, 2013, 6:03 PM), http://www.azcentral.com/opinions/articles/20131031uncertain-election-rules-may-hobble-democrats.html.
²¹ Ariz. Citizens Clean Elections Comm’n, 2013 WL 5761620, at *11.
²² The President and Speaker asserted the unconstitutionality of the Clean Elections Act contribution caps as an affirmative defense to explain why lawmakers felt they ought to amend them in H.B. 2593. The Clean Election Commission argued that since the President and Speaker did not file a cross-claim against the Secretary, nor a counter-claim against the Clean Elections Commission, the issue of whether the caps violated the First Amendment is not properly before the court. The Court of Appeals agreed with the President and Speaker, noting “[w]e see no legal impediment to the President and Speaker challenging the constitutionality of the CEA limits on remand.” Judge Patricia Norris noted in oral argument that Arizona Rules of Civil Procedure 8 allows judges to construe pleadings liberally, thus there was no obvious legal problem with interpreting an affirmative defense as a cross-claim or counter-claim.
²³ To do so, the Supreme Court would have to liberally construe the President and Speaker’s affirmative defense as a cross- or counter-claim.
²⁴ Arizona standing jurisprudence is not bound by the constraints of federal standing, and merely turns on “questions of prudential or judicial restraint.” Dobson v. State ex rel. Comm’n on Appellate Court Appointments, 309 P.3d 1289, 1292 (Ariz. 2013) (quoting Armory Park Neighborhood Ass’n v. Episcopal Cmty. Servs. in Ariz., 712 P.2d 914, 919 (Ariz. 1985)).
²⁵ Petition for Review of a Special Action Decision of the Court of Appeals at 9, Ariz. Citizens Clean Elections Comm’n v. Brain, No. CV 13-0341-PR (Nov. 4, 2013).
²⁶ Judge Patricia Norris raised this possibility in oral arguments at the Court of Appeals but ultimately the court reached a decision on other grounds.
²⁷ Ariz. Citizens Clean Elections Comm’n, 2013 WL 5761620, at *9 (quoting Buckley, 424 U.S. at 21).
²⁸ The new, higher limits enacted by H.B. 2593 were in effect from September 13, 2013, to October 15, 2013.
²⁹ Secretary Bennett’s Response in Opposition to Petitioners’ Motion to Stay Preliminary Injunction at 2–3, Ariz. Citizens Clean Elections Comm’n, No. 1 CA-SA 13-0239, 2013 WL 5761620.
³⁰ Id. at 2.
³¹ Id.