Arizona Supreme Court Grapples with Challenge to “Dark Money” Disclosure Law

The Arizona Supreme Court heard oral arguments this month in a challenge to the state’s landmark campaign finance disclosure law.

The case, Montenegro v. Fontes, concerns a citizen-initiated ballot measure to increase the transparency of big money in Arizona’s elections. Arizonans approved the measure, Proposition 211 — also known as the Voters’ Right to Know Act — with 72 percent of the vote in the 2022 general election.

Before Prop 211’s passage, Arizona’s elections were flooded with dark money — funds from undisclosed sources spent to influence election outcomes. While state law required anyone who gave $50 or more directly to a candidate or ballot campaign to disclose their name and other information, political nonprofits and other independent groups that spent money on elections were not required to disclose the source of any of their funds, even the identities of their largest donors. This lack of transparency allowed wealthy individuals to funnel money through intermediaries to avoid disclosure and spend huge sums anonymously.

Without transparency into the major sources of election spending, voters don’t know who is trying to influence them, making it harder for them to reach informed decisions about which candidates and issues to support. Anonymous big money also obscures who might have access to and influence over elected leaders, exacerbating concerns about politicians making policy decisions to benefit their donors rather than the public.

To combat secret spending, Prop 211 closed existing loopholes and created new disclosure rules. Major campaign spenders — entities that spend more than $50,000 on campaigns for statewide office or $25,000 on other campaigns — now have to reveal the source of all donations over $5,000. Groups also must inform donors if their contributions could be used for campaign spending and, if so, give them the option to opt out of having their donations used for political purposes. The act also vests enforcement authority in Arizona’s Clean Elections Commission and empowers commissioners to adopt any rules needed to carry out its mission.

Despite Prop 211’s broad support among voters, state lawmakers sued the secretary of state and the commission in August 2023 seeking to enjoin the act in its entirety. The suit focuses on two provisions: one that allows the commission to “perform any other act that may assist in implementing” the law and another that says the commission’s 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.” The lawmakers claim that these provisions transform the commission into an unconstitutional “superagency” that restricts the legislature’s authority and violates Arizona’s separation of powers. And despite a clause in Prop 211 stating that the remaining parts of the act remain valid even if one or more parts are struck down, the plaintiffs argue that severing these provisions is not an adequate remedy because they are central to the intended statutory scheme.

The trial court rejected the plaintiffs’ request for a preliminary injunction, finding that their claims were “on wobbly ground” and faulting them for waiting nine months before initiating the suit. But the court also denied the defendants’ motion to dismiss, saying that a decision on the merits should wait until summary judgment or trial.

An appellate court partially reversed that decision after the lawmakers appealed. The court held that they lacked standing to challenge the provision granting the commission the power to “perform any other act” because the delegation of authority to the commission, without more, does not harm the legislature. Similarly, the court said, the rules the commission has promulgated using that authority do not cause an injury because they do not regulate the legislature directly or nullify its power.

However, the court reversed the holding with respect to the provision insulating the commission’s rules and enforcement actions from the legislature. The court explained that by restricting the legislature’s ability to pass campaign spending laws in the future, that portion of the act unconstitutionally infringes legislative power. The court therefore enjoined the provision, declaring it severable from the rest of the act.

Unsatisfied with this partial injunction, the lawmakers petitioned the Arizona Supreme Court for review. The justices granted the request in early January, agreeing to consider standing and severability. Their questions during the March 6 oral argument suggest they are focused on the potential broad implications of these issues.

On standing, several justices asked what limiting principle should apply. If the legislature is allowed to sue any time it claims a hypothetical separation of powers violation, they wondered, would it ever lack standing? Counsel from the Arizona attorney general’s office emphasized this concern and reiterated that the legislature had not yet suffered any injury. Allowing them to sue in this case, he argued, would effectively erase the standing requirement and could open the door for legislators to circumvent the normal lawmaking process by bringing lawsuits any time they want to undo lawful delegations of power enacted in prior legislative sessions. Counsel for the lawmakers countered that the legislature shouldn’t have to wait until it suffers an actual harm to sue because the act is inherently offensive to legislative authority. So long as the legislature can state a plausible claim that a law is facially overbroad, he argued, courts should let the suit proceed.

The justices also pressed the advocates to provide a workable standard for severability. Chief Justice Ann Timmer, for example, noted that Prop 211 included a severability clause and asked how the court could ignore the will of the voters who enacted it. Counsel for the lawmakers responded that the court should evaluate the messaging during the Prop 211 campaign and identify which provisions were “sold” to voters as essential. In this case, he claimed, Prop 211 clearly meant to turn the commission into a superagency immune from political oversight, making the provision that placed the commission’s actions beyond legislative reach essential and thus not severable. Counsel for the commission, meanwhile, argued that voters simply wanted a campaign finance disclosure law to be implemented by a nonpartisan commission, which is precisely what the act does. Severability, he said, is an objective inquiry based on workability. And because the act is workable without the provision insulating the commission from legislative oversight, he urged the court to hold that the rest of the law stands even if that part falls.

Montenegro is not the only case challenging the act. A month after Prop 211 passed, conservative nonprofit groups and several individual donors sued, arguing, among other things, that the newly enacted disclosure provisions violate their free speech and privacy rights under Arizona’s constitution. Drawing on longstanding precedents from the U.S. Supreme Court upholding campaign finance disclosure and disclaimer laws, including Citizens United v. FEC, an Arizona trial court dismissed the lawsuit. An appellate court affirmed that dismissal in November, and the plaintiffs’ petition to the Arizona Supreme Court for review remains pending.

In the years since it passed, Prop 211 has served as a model for other states, with legislators in Hawaii, Illinois, and Maine proposing similar legislation to banish anonymous big money from their elections. Reformers across the country therefore are likely watching closely, as the outcome of Montenegro could hold significant implications for the future of campaign finance laws in Arizona and beyond.

Eric Petry is a counsel in the Brennan Center’s Elections and Government Program.

Suggested Citation: Eric Petry, Arizona Supreme Court Grapples with Challenge to “Dark Money” Disclosure Law, Sᴛᴀᴛᴇ Cᴏᴜʀᴛ Rᴇᴘᴏʀᴛ (Mar. 17, 2025), https://statecourtreport.org/our-work/analysis-opinion/arizona-supreme-court-grapples-challenge-dark-money-disclosure-law