Ninth Circuit Upholds Arizona's Public Campaign Finance Law

In the third significant circuit court decision applying Citizens United v. FEC--the Supreme Court's January 21 ruling striking down limits on independent campaign expenditures--the Ninth Circuit last week in McComish v. Bennett upheld Arizona's public campaign finance law.  (We posted on the earlier two decisions here and here.)

Under the Arizona law, any candidate may participate in the state's public campaign finance scheme and receive a state grant for campaign expenditures.  Participating candidates relinquish their right to raise and spend private donations.  But when a participating candidate faces a non-participating candidate who spends more than a threshold amount under the law, the participating candidate qualifies for additional state "matching funds."  Thus the law moves to equalize--or at least control inequalities in--campaign expenditures between participating candidates and non-participating candidates.

Arizona enacted the law, a voter initiative, in the wake of a rash of political scandals in the state under the old campaign finance laws.  According to the law's findings, Arizona's previous election financing system "[u]ndermine[d] public confidence in the integrity of public officials," because it "[a]llow[ed] Arizona elected officials to accept large campaign contributions from private interests over which they have governmental jurisdiction."  The law's purpose was to "create a clean elections system that will improve the integrity of Arizona state government by diminishing the influence of special-interest money, . . . encourage citizen participation in the political process, . . . and promote freedom of speech."

The Ninth Circuit upheld the law, applying intermediate scrutiny.  In arriving at intermediate scrutiny, the court asked first whether the type of speech in question was fully protected and second what was the nature of the law's burden on the speech.

On the first question, the court ruled that the law had a hybrid effect--that it impacted by contributions and expenditures.  Under Buckley v. Valeo, contributions are not fully protected, while expenditures are; but a law with a hybrid effect, like Arizona's, is treated as impacting fully protected speech.

On the second question, the plaintiffs argued that the Supreme Court's 2008 ruling in Davis v. FEC governed and that the Arizona law, like the law in Davis, placed a severe burden on speech, triggering strict scrutiny.  Davis struck down the "Millionaire's Amendment" to the Bipartisan Campaign Reform Act of 2002--the provision that imposed an "asymmetrical regulatory scheme" in any campaign in which all candidates were privately funded but in which any one candidate financed his or her campaign with personal funds above a threshold amount.  Under the provision, the opponent of a candidate who exceeded the threshold qualified for "contributions at treble the normal limit . . . ."

The Ninth Circuit rejected this argument, holding that Davis said nothing about publicly funded schemes like the Arizona program.  Instead, wrote the court, "it is constitutional to subject candidates running against each other for the same office to entirely different regulatory schemes when some candidates voluntarily choose to participate in a public financing system.  Buckley."  The court ruled that the Arizona law's impact on speech was "indirect or minimal"--that the plaintiffs failed to show that any non-participating candidate declined a contribution or restricted spending in order to avoid triggering the matching funds provision:

In this case, as in Buckley and Citizens United, the burden that Plaintiffs allege is merely a theoretical chilling effect . . . .  The matching funds provision does not actually prevent anyone from speaking in the first place or cap campaign expenditures.  Also, as in Buckley and Citizens United, there is no evidence that any Plaintiff has actually suffered the consequence they allege the Act imposes.  We conclude that the burden created by the Act is most analogous to the burden of disclosure and disclaimer requirements in Buckley and Citizens United.  Following the Supreme Court's precedents in those cases, because the Act imposes only a minimal burden on fully protected speech, intermediate scrutiny applies.

McComish at 7345.

Applying intermediate scrutiny, the court upheld the law:

The State has a sufficiently important interest in preventing corruption and the appearance of corruption. . . . Furthermore, the State has an interest in providing matching funds to encourage participation in its public funding scheme. . . .  Viewing the Act from this perspective, it is clear that the Act's anticorruption interest is further promoted by high participation in the program.

McComish at 7345-47.

SDS