Toma v. Fontes

553 P.3d 881

Ben TOMA, et al., Plaintiffs/Appellants,

v.Adrian FONTES, et al., Defendants/Appellees,andKristin Mayes, et al., Intervenors/Appellees.

No. 1 CA-CV 24-0002

Court of Appeals of Arizona, Division 1.

Filed June 27, 2024

Appeal from the Superior Court in Maricopa County, No. CV2023-011834, The Honorable Timothy J. Ryan, Judge. AFFIRMED IN PART; REVERSED IN PART; REMANDED

Snell & Wilmer LLP, Phoenix, By Brett W. Johnson, Tracy A. Olson, Ryan Hogan, Charlene A. Warner, Counsel for Plaintiffs/Appellants Toma, et al.

Sherman & Howard LLC, Phoenix, By Craig A. Morgan, Shayna Stuart, Counsel for Defendant/Appellee Adrian P. Fontes

Osborn Maledon PA, Phoenix, By Mary R. O’Grady, Eric M. Fraser, Sarah P. Lawson, Counsel for Defendant/Appellee Arizona Citizens Clean Elections Commission

Arizona Attorney General’s Office, Phoenix, By Alexander W. Samuels, Nathan T. Arrowsmith, Luci D. Davis, Counsel for Intervenor/Appellee Kristin K. Mayes

Campaign Legal Center, Washington, DC, By David Kolker, Tara Malloy, Elizabeth D. Shimek, Counsel for Intervenor/Appellee Voters’ Right to Know

Arizona Center for Law in the Public Interest, Phoenix, By Daniel J. Adelman, Chanele N. Reyes, Counsel for Intervenor/Appellee Voters’ Right to Know

Arizona Chamber of Commerce & Industry, Phoenix, By Nate Curtisi, Counsel for Amicus Curiae

Acting Presiding Judge Michael S. Catlett delivered the opinion of the Court, in which Judge James B, Morse Jr. and Judge Jennifer B. Campbell joined.

OPINION

CATLETT, Judge:

¶1 Arizona voters approved Proposition 211, also known as the "Voters’ Right to Know Act" ("the Act"), in November 2022. The Act attempts to regulate "dark money," which it describes as "the practice of laundering political contributions, often through multiple intermediaries, to hide the original source." To accomplish that purpose, the Act requires a "covered person" to disclose the original source of donations exceeding $5,000 and used for "campaign spending." The Act also delegates authority to the Arizona Clean Elections Commission ("the Commission") "to enforce its disclosure requirements."

¶2 Two sections of the Act are at issue. First, the Act grants the Commission authority to "[p]erform any other act that may assist in implementing this chapter." AR.S. § 16-974(A)(8). Second, the Act provides that "[t]he [C]ommission’s rules and any commission enforcement actions pursuant to this chapter are not subject to the approval of or any prohibition or limit imposed by any other executive or legislative governmental body or official." AR.S. § 16-974(D).

¶3 The Speaker of the House of Representatives, Ben Toma, and the President of the Senate, Warren Petersen (collectively, "the Legislature"), seek to enjoin the Act and three rules the Commission issued after the Act became effective. The Legislature claims the two statutory provisions violate the separation of powers, the nondelegation doctrine, and the Voter Protection Act, and it claims the Commission lacked authority to issue the three rules. The Legislature seeks to have the Act preliminarily enjoined in full.

¶4 We conclude the Legislature has standing to challenge § 16-974(D) insofar as it prevents the Legislature from limiting or prohibiting the Commission’s rules or enforcement actions. But the Legislature lacks standing to challenge § 16-974(A)(8) and the Commission’s three rules. We conclude § 16-974(D) is unconstitutional in part but is severable. We therefore preliminarily enjoin § 16-974(D), but only in part.

STATUTORY AND REGULATORY BACKGROUND

I.

¶5 The Act "establishes" that Arizonans have "the right to know the original source of all major contributions used to pay, in whole or part, for campaign media spending." 2022 Ariz. Legis. Serv. Prop. 211 § 2(A). It also "empower[s] the [Commission] and individual voters to enforce its disclosure requirements" and imposes "significant civil penalties" for violating those requirements. 2022 Ariz. Legis. Serv. Prop. 211 § 2(D).

¶6 Under the Act, "covered persons" who surpass a set amount of "campaign media spending" are required to disclose to the Secretary of State particular information about certain donors. A.R.S. §§ 16-971(7)(a), (10)(a)–(b); 16-973(A)(6). With some exceptions, a "covered person" is "any person whose total campaign media spending or acceptance of in-kind contributions to enable campaign media spending, or a combination of both, in an election cycle is more than $50,000 in statewide campaigns or more than $25,000 in any other type of campaigns." AR.S. § 16-971(7)(a). "Campaign media spending" includes "spending monies or accepting in-kind contributions to pay for" a variety of political activities and public communications, as well as any "[r]esearch, design, production, polling, data analytics, mailing or social media list acquisition or any other activity conducted in preparation for or in conjunction with" certain political activities or public communications. A.R.S. § 16-971(2)(a)(i)-(vii). "Covered persons" must notify donors that their funds may be used for "campaign media spending" and let them elect not to have their funds used for that purpose. A.R.S. § 16-972(B). Absent consent, a donor’s funds may not be used or transferred for "campaign media spending" for 21 days. A.R.S. § 16-972(C).

¶7 Violating the Act carries a steep penalty—"at least the amount of the undisclosed or improperly disclosed contribution and not more than three times that amount." A.R.S. § 16-976(A). "Any qualified voter" in Arizona may file a complaint against any person for violating the Act’s requirements or the Commission’s rules. A.R.S. § 16-977(A).

¶8 The Act designates the Commission as "the primary agency authorized to implement and enforce" the Act. A.R.S. § 16-974(A). The Commission may (1) adopt and enforce rules, (2) issue and enforce civil subpoenas, (3) initiate enforcement actions, (4) conduct fact-finding hearings and investigations, (5) impose civil penalties, (6) seek relief in court as necessary, and (7) establish the records regulated parties must maintain. A.R.S. § 16-974(A)(1)–(7). The Act also contains a catchall grant of authority, allowing the Commission to "[p]erform any other act that may assist in implementing [Chapter 6.1]." A.R.S. § 16-974(A)(8).

¶9 Finally, the Act insulates the Commission. Its rulemaking is exempt from the Arizona Administrative Procedures Act. A.R.S. § 16-974(D). Its rules and enforcement actions "are not subject to the approval of or any prohibition or limit imposed by any other executive or legislative governmental body or official." Id. And if there is a conflict between the Act and state law, the Act prevails. A.R.S. § 16-978(B). But the Act allows "the legislature, a county board of supervisors or a municipal government" to enact "more stringent disclosure requirements for campaign media spending." A.R.S. § 16-978(A).

II.

¶10 "The Arizona Citizens Clean Elections Act, passed by initiative in 1998, created a voluntary public financing system to fund the primary and general election campaigns of candidates for state office." Ariz. Free Enter. Club’s Freedom Club PAC v. Bennett, 564 U.S. 721, 728, 131 S.Ct. 2806, 180 L.Ed.2d 664 (2011). That Act also created the Commission and gave it enforcement authority. See A.R.S. §§ 16-955(A); 16-956(A)(7).

¶11 The Commission is comprised of five commissioners, no more than two of whom can be from the same political party or county. A.R.S. § 16-955(A). Each commissioner serves a five-year term and "shall be a qualified elector who has not, in the previous five years in this state, been appointed to, been elected to or run for any public office … or served as an officer of a political party." A.R.S. §§ 16-955(0), (D), (I). The commissioners are not elected; various elected officials appoint them. The Governor and other statewide officials selected the first set of commissioners, and those elected officials select replacements as vacancies occur. A.R.S. §§ 16-955(C)-(D), (F); see Citizens Clean Elections Comm’n v. Myers, 196 Ariz. 516, 518 ¶ 3, 1 P.3d 706, 708 (2000).

[1] ¶12 By design, the Commission has little political accountability. Commissioners must "act quite independently of elected officials." Myers, 196 Ariz. at 523 ¶ 29, 1 P.3d at 713. "They are not subordinates of the Governor or any other official who may have appointed them." Id. The Governor may remove a commissioner, but only "with concurrence of the senate" and "for substantial neglect of duty, gross misconduct in office, inability to discharge the powers and duties of office or violation of [§ 16-955]." A.R.S. § 16-955(E). Moreover, "[n]o commissioner, during the commissioner’s tenure or for three years thereafter, shall seek or hold any other public office[.]" A.R.S. § 16-955(1).

III.

¶13 The Commission has adopted three rules relevant here. See A.R.S. § 16-974(A). A.A.C. R2-20-801 explains when certain activities listed in § 16-971 (2)(a)(vii) qualify as "campaign media spending." The rule says those activities—"research, design, production, polling, data analytics, mailing or social media list acquisition or any other activity conducted in preparation for or in conjunction with" other activities listed in § 16-971(2)(a)—do not qualify as "campaign media spending" except when "specifically conducted in preparation for or in conjunction with" other campaign media spending. A.A.C. R2-20-801(B).

¶14 A.A.C. R2-20-803 permits donors to opt out of campaign media spending after the 21-day notice period in the Act. The rule states that "[i]f a donor does not opt out after the initial notice period, a covered person may make subsequent written notices to a donor of their right to opt out[.]" A.A.C. R2-20-803(D). It also allows "[a] donor" to "request to opt out at any time after the initial notice period." A.A.C. R2-20-803(E). If a donor does so, the "covered person" must acknowledge the request in writing within 5 days. Id. Then, the "donor shall be treated as having...