Policy Groups May Protect Privacy of Some Contributors Under Colorado Secretary of State’s New Campaign Finance Rules

John Kramer
John Kramer · July 19, 2006

Arlington, Va.—Colorado policy groups may educate the public about issues of public importance without having to divulge the names of some of their contributors under new rules issued earlier this week [NOTE TO EDITOR: Tuesday, July 18, 2006] by the Colorado Secretary of State. The new rules come in response to a constitutional lawsuit filed by the Independence Institute in Golden, Colo. Although the Colorado Secretary of State issued new rules designed to solve the constitutional problems that the Institute’s lawsuit raised, significant problems remain.

The Independence Institute, which is represented in the case by the Institute for Justice in Arlington, Va., filed suit last September after being accused of “campaigning” against Referenda C and D in violation of Colorado’s campaign finance laws simply for criticizing the referenda as unnecessary measures that would raise taxes and increase government spending. Under Colorado’s vague laws, any group that speaks out about a ballot issue can be considered an “issue committee” and forced to disclose the identities of all contributors and comply with onerous tracking and reporting requirements. Because the law is not clear, however, policy groups like the Independence Institute cannot know whether they must comply with these requirements until after they have spoken out, that is, when the Secretary of State tells them. Policy groups thus faced an impossible choice: speak out and risk prosecution; disclose the identities of all contributors and try to comply with onerous reporting and other rules; or refrain from speaking about ballot issues altogether.

To remedy this unconstitutional situation, the Independence Institute challenged the law as a violation of its and its contributors’ rights to free speech and association.

Issued just three days before the Independence Institute was scheduled to file a motion asking the Court to rule in its favor in the case, the Secretary’s new rules state that policy groups considered “issue committees” only have to disclose the identities of contributors who earmark their contributions for activities that support or oppose ballot issues. The new rules also clarify how such groups can end their status as “issue committees” and how they must handle contributions earmarked for ballot issue activities.

“People have a right to know whether their identities will be disclosed before they contribute to advocacy groups and political causes,” said Steve Simpson, an Institute for Justice senior attorney. “The Independence Institute has recognized this simple truth all along. It’s nice that the Secretary seems to understand it now as well.”

“Unfortunately, it is still not clear when a group becomes an ‘issue committee’,” added Simpson. “So policy groups still must engage in an unconstitutional guessing game about when or whether they will have to comply with the law’s onerous disclosure and reporting requirements.”

Under the law, an “issue committee” is any group that has “a major purpose” of supporting or opposing a ballot issue and spends over $200 toward that end. The Secretary’s new rules do not address the meaning of the terms “a major purpose” or “support or oppose.”

“We welcome the Secretary’s effort to ease the unconstitutional burden of these laws on groups that simply want to speak out on ballot issues,” stated Jon Caldara, president of the Independence Institute. “We would have preferred these changes before we spent tens of thousands of dollars fighting the complaint against us, but this is a start. At least other groups will not face quite the threat to their rights to free speech and association that we did when we began this fight. But we will keep fighting until all of the constitutional problems with these laws are fixed.”

The parties are scheduled to file motions for summary judgment in the case, beginning on July 21, 2006. Briefing will continue through the summer. The court is expected to issue a ruling in the fall.