TIMOTHY M. BURGESS, UNITED STATES DISTRICT JUDGE.
Plaintiffs David Thompson, Aaron Downing, Jim Crawford, and District 18 of the Alaska Republican Party ("District 18") bring this lawsuit against Defendants Paul Dauphinais, Mark Fish, Irene Catalone, Ron King, Kenneth Kirk, and Vance Sanders (collectively, "Defendants" or "the State") to challenge the constitutionality of four provisions of Alaska's campaign finance laws under the First and Fourteenth Amendments.
In 1996, the Alaska Legislature enacted Chapter 48 SLA 1996 for the purpose of "substantially revis[ing] Alaska's campaign finance laws in order to restore the public's trust in the electoral process and to foster good government." Chapter 48 SLA 1996 was based on a ballot initiative drafted
In 2003, the Alaska Legislature modified Alaska's campaign finance laws by enacting Chapter 108 SLA 2003. Chapter 108 SLA 2003 relaxed some of the campaign contribution limits set by Chapter 48 SLA 1996, including by raising the amount an individual could contribute to a political candidate or group that was not a political party from $500 to $1,000, annually. Chapter 108 SLA 2003 became effective September 14, 2003.
Three years later, 73 percent of Alaska voters voted in favor of Ballot Measure 1, which proposed revising Alaska's campaign finance laws to lower the amount an individual could contribute to a political candidate or group that was not a political party back to $500 per year. The $500 base limits became effective December 17, 2006.
Plaintiffs in this case are individuals and a subdivision of a political party who contributed or attempted to contribute the maximum dollar amount permitted under Alaska's current campaign finance laws, as established by the above session laws and initiatives. Downing is an Alaska resident who, in 2015, contributed $500 to the campaign of mayoral candidate Larry DeVilbiss and to the campaign of state house candidate George Rauscher, the maximum contribution amounts permitted under Alaska Stat. 15.13.070(b). Crawford is an Alaska resident who, in 2015, contributed $500 to the campaign of mayoral candidate Amy Demboski and to the Alaska Miners' Association Political Action Committee, the maximum contribution amounts permitted under Alaska Stat. 15.13.070(b). Thompson is a Wisconsin resident and brother-in-law to Alaska State Representative Wes Keller who, in 2015, attempted to make a $500 contribution to Keller's campaign, but was unable to do so because the campaign had already received the maximum dollar amount it could accept from nonresidents under Alaska Stat. 15.13.072(e)(3). And District 18 is a subdivision of the Alaska Republican Party that was limited to a $250 contribution to Amy Demboski's mayoral campaign, the maximum amount that it was permitted to contribute under the aggregate limit on the dollar amount a campaign can accept from a political party set forth in Alaska Stat. 15.13.070(d)(4).
By this suit, Plaintiffs challenge four distinct parts of Alaska's campaign finance laws under the First and Fourteenth Amendments. Each challenged provision is discussed individually below. In relief, Plaintiffs seek a declaratory judgment that each of the challenged provisions are unconstitutional, a permanent injunction prohibiting the State from enforcing the challenged provisions, and full reasonable costs and attorney's fees under 42 U.S.C. § 1983.
The Court has jurisdiction over this case pursuant to 28 U.S.C. §§ 1331 and 1343. This civil action arises under the First and Fourteenth Amendments of the United States Constitution and 42 U.S.C. § 1983.
It is well established that the First Amendment protects political association as well as political expression.
After Citizens United, what constitutes a sufficiently important state interest to support limits on campaign contributions has narrowed. Now, the prevention of quid pro quo corruption, or its appearance, is the only state interest that can support limits on campaign contributions.
Plaintiffs first challenge the provisions of Alaska's campaign finance laws that prohibit an individual from contributing more than $500 per year to a candidate for political office and to a group that is not a political party.
As part of that argument, Plaintiffs contend that Defendants did not present adequate evidence at trial to establish that Alaska's $500 base limits further the sufficiently important state interest of combating quid pro quo corruption or its appearance. The Court disagrees.
At trial, the State put forward evidence that the risk of quid pro quo corruption or its appearance in Alaska politics and government is both actual and considerable. To start, Dr. Gerald McBeath, a Professor Emeritus of Political Science at the University of Alaska Fairbanks who was qualified as an expert in this case on the topic of Alaska state and local politics and government, identified several factors that make Alaska highly, if not uniquely, vulnerable to corruption in politics and government. The first of these factors is legislative size. Alaska has the second smallest legislature in the United States and the smallest senate, with only twenty senators. As Dr. McBeath explained at trial, that means that just ten votes can stop a legislative action such as an oil or gas tax increase from becoming law. Consequently, the incentive to buy a vote, and the chances of successfully doing so, are therefore higher in Alaska than in states with larger legislative bodies. A second factor is Alaska's almost complete reliance on one industry for a majority of its revenues. The percentage of Alaska's budget generated by royalties, taxes, and revenues from oil and gas is the highest among all of the oil and gas producing states in the United States. In fact, it is exponentially greater: typically 85 to 92 percent in Alaska compared to less than 50 percent for every other state. Another factor making Alaska susceptible to corruption in politics and government is its small population coupled with its vast size. According to Dr. McBeath, these characteristics make enforcement of campaign finance laws much more challenging, as it limits both the number and abilities of watchdog organizations.
In addition to Dr. McBeath's testimony, the public officials who appeared at trial, regardless of whether they were called by Plaintiffs or the State, uniformly testified that they experienced and observed pressure to vote in a particular way or support a certain cause in exchange for past or future campaign contributions while in office. Defense witness David Finkelstein, a former Alaska state representative who served from 1989 to 1996 testified that "there was an inordinate influence from contributions on the actions of the legislature," and that legislators would often mention which interest groups had contributed large amounts to their campaigns or to their party during closed-door caucus meetings over whether particular bills would move forward. He further testified
Witnesses for the Plaintiffs also provided evidence that some large contributors expect political favors in exchange for their contribution.
Beyond this testimony, the State presented evidence about the widely publicized VECO public corruption scandal, in which approximately ten percent of the Alaska Legislature, including state representatives Vic Kohring, Pete Kott, and Beverly Masek, were directly implicated for accepting money from Bill Allen and VECO, Allen's oilfield services firm, in exchange for votes and other political favors.
The State also introduced at trial a Government Ethics Center study commissioned by the Alaska State Senate in 1990 in which the Government Ethics Center surveyed Alaska legislators, public officials, and lobbyists as to the image of and the public trust in the Alaska Legislature. The study concluded that "that things are not what they should be" and that "[t]he reputation and image of the legislature is unacceptably low." Of particular relevance
Taking all of the testimony and other evidence together, the Court finds that Defendants have made an adequate showing that the risk of quid pro quo corruption or its appearance in Alaska politics and government from large campaign contributions is pervasive and persistent.
In determining the constitutionality of Alaska's $500 base limits, Plaintiffs contend that the Court should apply the two-part, multi-factor "closely drawn" test articulated by the Supreme Court in Randall v. Sorrell
Under Eddleman's "closely drawn" test, limits on contributions are "closely drawn" if they "(a) focus narrowly on the state's interest, (b) leave the contributor free to affiliate with a candidate, and (c) allow the candidate to amass sufficient resources to wage an effective campaign."
Here, Plaintiffs do not dispute and the Court agrees with Defendants that the base limits set forth in Alaska Stat. 15.13.070(b) leave an individual free to affiliate with a candidate. Plaintiffs do, however, dispute that Alaska's $500 base limits focus narrowly on Alaska's interest in the prevention of quid pro quo corruption or its appearance. They further claim that the State has failed to prove that the $500 base limits allow candidates, particularly challengers in competitive races, to amass sufficient resources to run effective campaigns. The Court addresses each claim in turn.
Citing Frank's testimony as to why and how he selected $500 as the individual-tocandidate and individual-to-group contribution limit amounts for his ballot initiative back in the 1990s, Plaintiffs contend that the $500 individual-to-candidate and individual-to-group contribution limits were put in place for impermissible purposes other than preventing quid pro quo corruption or its appearance, and that the State therefore cannot show that those limits satisfy the first part of Eddleman's "closely drawn" test. But Plaintiffs' argument forgets that Ballot Measure 1, which established the current $500 base limits and which was approved by a 73 percent margin of Alaska voters, explicitly contemplated an anticorruption purpose.
Plaintiffs also argue that the $500 base limits impermissibly restrict their free speech and associational rights because Defendants have not shown that a higher contribution limit, such as a $750 or $1,000 limit (or even a $500 limit indexed for inflation), would be ineffective at preventing quid pro quo corruption or its appearance. That argument, however, misunderstands both the Court's role in assessing and the State's task in proving the constitutionality of a contribution limit. In Buckley, the Supreme Court rejected an overbreadth claim that the $1,000 contribution
What is more, the State did elicit testimony at trial indicating that the $500 individual-to-candidate and individual-to-group limits are, in fact, likely more effective at furthering the State's interest in preventing quid pro quo corruption or its appearance than a hypothetical $750 or $1,000 limit. Professor Richard Painter, whom the Court qualified as an expert in government ethics and institutional corruption with an emphasis on campaign finance reform, explained that lower contribution limits are often more effective at decreasing the risk of quid pro quo arrangements or their appearance because they make a candidate less dependent upon an individual or group of individuals for financial support, especially in a state like Alaska where the cost of campaigns for state or municipal office are relatively low. Lower limits often increase the donor base and decrease the impact of an individual contribution, thus making it easier for a candidate to decline a contribution contingent upon the performance of a political favor. Consistent with Professor Painter's expert testimony, Croft testified that the higher the contribution limit, "it's harder and harder to turn that down."
Finally, with respect to the individual-to-group contribution limit, the Court finds that Defendants have made the appropriate showing that Alaska Stat. 15.13.070(b)'s individual-to-group limit focuses narrowly on the State's interest in reducing the risk of quid pro quo corruption or its appearance, as it works to keep contributors from circumventing the $500 individual-to-candidate base limit. The Supreme Court in McCutcheon affirmed that the anti-circumvention interest originally recognized in Federal Election Commission v. Beaumont
In addition to their argument that the $500 base limits set forth in Alaska Stat. 15.13.070(b) do not focus narrowly on the State's interest in avoiding actual or apparent quid pro quo corruption, Plaintiffs argue that those limits are unconstitutionally low under the third prong of Eddleman's "closely drawn" test. While it is certainly true that a contribution limit that is too low "could itself prove an obstacle to the very electoral fairness it seeks to promote,"
In this case, Plaintiffs claim that the $500 base limits set forth in Alaska Stat. 15.13.070(b) are not closely drawn because they do not allow candidates in Alaska, and in particular challengers in competitive races, to amass the resources necessary for effective advocacy. But Plaintiffs' evidence does not show that Alaska's $500 base limits are "`so radical in effect as to render political association ineffective, drive the sound of a candidate's voice beyond the level of notice, and render contributions pointless.'"
Plaintiffs also called Clark Bensen, a consultant and a former director of political analysis for the Republican National Committee whom the Court qualified as an expert "in the area of analyzing campaign finance data for the purpose of determining whether contribution limits permit candidates to amass the resources that they need to mount effective campaigns," to testify at trial. Based on his analysis of campaign finance data for the State of Alaska, Bensen opined that the $500 base limits set forth in Alaska Stat. 15.13.070(b) are unconstitutionally low because candidates in competitive campaigns often spend more than they raise and because those candidates would be able to raise more money if the $500 limits were instead $750 or $1,000. The Court, however, does not find Bensen's testimony to be credible. At trial, Mr. Bensen acknowledged that his analysis was based on exaggerated estimates and therefore flawed. He stated, "I didn't do a very sophisticated analysis.... It's not like I didn't do it, but I didn't do it well, shall we say, or completely."
In support of the $500 base limits set forth in Alaska Stat. 15.13.070(b), Defendants called expert witnesses Thomas Begich and John-Henry Heckendorn to provide their opinions as to whether Alaska's current contribution limits interfere with a candidate's ability to amass the resources necessary for effective advocacy.
Begich and Heckendorn also testified that the candidate who raises the most money does not necessarily win the election. Heckendorn explained at trial that in 2012, three of the eight competitive state senate races and seven of the fourteen competitive state house races were won by the candidate who raised less money than his opponent — "almost a 50/50 split in terms of campaigns that raise more money being successful and campaigns that raised less money being successful." According to Begich, this is because a number of factors other than the amount of money available to a candidate influence a candidate's success and ability to run an effective campaign, including demographics, the quality of the candidate, and the cost of the candidate's campaign.
To this end, Begich and Heckendorn took issue with Plaintiffs' testimony that the cost of campaigns is increasing. Begich testified that while the cost of certain parts of a campaign may be increasing, it is not, in fact, getting more expensive to run campaigns:
Finally, Begich and Heckendorn testified that Alaska's campaign contribution limits do not, as Plaintiffs claim, favor incumbents over challengers, nor do the limits prevent challengers from running effective campaigns. Their opinions are bolstered by the results of the most recent Alaska primary elections, in which Alaska voters dispatched seven incumbents from the Alaska Legislature.
In light of the above evidence, the Court finds that in the period since the current $500 base limits became effective, candidates for state elected office, including challengers in competitive races, have been able to raise funds sufficient to run effective campaigns. The Court therefore holds that the $500 base limits set forth in Alaska Stat. 15.13.070(b) further the sufficiently important interest in reducing the risk of quid pro quo corruption or its appearance, and are neither "too low" nor "too strict"
Plaintiffs next challenge the provision of Alaska's campaign finance laws that prohibits an individual seeking the office of state representative, municipal office, or office other than governor, lieutenant governor, or state senator from accepting more than $3,000 per year from an individual who is not a resident of Alaska.
In evaluating the constitutionality of Alaska's aggregate nonresident limit, Plaintiffs claim the Court should apply strict scrutiny because the aggregate limit, once reached for a candidate, prevents all other nonresidents from contributing any amount to that particular candidate. Alternatively, Plaintiffs argue strict scrutiny applies in light of their equal protection challenge. Plaintiffs' first argument for strict scrutiny fails under the Supreme Court's opinion in Beaumont.
Moreover, to the extent Plaintiffs' Fourteenth Amendment claims are not subsumed by their First Amendment claim,
Turning to the First Amendment challenge, Plaintiffs stated in their summary judgment papers and at oral argument on the parties' summary judgment motions that they are challenging the "common unconstitutional denominator of the discriminatory aggregation of nonresident contributions" that Alaska Stat. 15.13.072(a) and (e)(3) impose upon nonresident contributors, but not the $3,000 aggregate limit amount itself. They argue that Defendants "presented no evidence of a nexus between residency and quid pro quo corruption or its appearance," and that Alaska's nonresident aggregate contribution limit is unconstitutional under McCutcheon and Vannatta.
In McCutcheon, the Supreme Court considered the constitutionality of a provision of the Federal Election Campaign Act of 1971, as amended by the Bipartisan Campaign Reform Act of 2002, that limited how much money a contributor could contribute in total to all political candidates or committees under the First Amendment. Noting that a court must be "particularly diligent in scrutinizing the law's fit" in the context of an aggregate limit,
In Vannatta, the Ninth Circuit considered the constitutionality of an Oregon ballot measure which prohibited state candidates from using or directing any contributions from out-of-district residents and penalized candidates when more than ten percent of their total "funding" came from such individuals.
Moreover, Alaska Stat. 15.13.072 is distinguishable from the provisions at issue in McCutcheon and Vannatta. In particular, unlike the provision at issue in McCutcheon, Alaska Stat. 15.13.072(a) and (e)(3) do not limit the total amount of money an individual can contribute during an election cycle. Rather, Alaska Stat. 15.13.072 is directed at the amount of out-of-state money a candidate for state or municipal office may accept;
More importantly, and unlike the defendants in those cases, Defendants in this case did produce evidence at trial establishing a nexus between the prevention of quid pro quo corruption or its appearance and the nonresident aggregate limit set forth in Alaska Stat. 15.13.072. At trial, Dr.
In addition to Dr. McBeath's testimony, Professor Painter opined that Alaska's nonresident aggregate limit furthers the State's interest in avoiding actual or apparent quid pro quo relationships. Citing the number of foreign and out-of-state corporations involved in natural resource extraction in Alaska and the fact that profits from that extraction are often sent out of state, Professor Painter explained that the interests of those corporations are frequently in conflict with the interests of Alaska residents who absorb the externalities of extraction while only getting some of the monetary benefits. He further testified that natural resource extraction rarely can be accomplished without the cooperation of government, and that natural resource extraction firms can and do exert pressure on their employees to make contributions to state and municipal candidates.
Based on that evidence, the Court concludes that the State has presented adequate evidence that the nonresident aggregate limit set forth in Alaska Stat. 15.13.072(a) and (e)(3) furthers Alaska's sufficiently important interest in preventing quid pro quo corruption or its appearance in two ways. First, the nonresident aggregate limit furthers the State's anticorruption interest directly by avoiding large amounts of out-of-state money from being contributed to a single candidate, thus reducing the appearance that the candidate feels obligated to outside interests over those of his constituents. Second, the nonresident aggregate limit discourages circumvention of the $500 base limit and other game-playing by outside interests, particularly given APOC's limited ability and jurisdiction to investigate and prosecute out-of-state violations of Alaska's campaign finance laws.
Whether Alaska's nonresident aggregate limit is closely drawn to further the State's anticorruption interest remains an open question. As explained above, Plaintiffs' challenge to Alaska Stat. 15.13.072(a) and (e)(3) does not raise that issue, and the Court has not evaluated, and has no opinion on, the provision's fit.
Finally, Plaintiffs challenge the provision of Alaska's campaign finance laws that prohibits a political party, including any subordinate unit of that group, from contributing more than $5,000 per year to a candidate seeking municipal office. As with Count III, Plaintiffs clarified in their summary judgment papers and at oral argument that they are not claiming that the $5,000 limit is unconstitutionally low, but rather are challenging the "unconstitutional concept of discriminatory aggregation of party components" that
When this case was first filed, the Court was skeptical that Defendants would be able to defend any of the provisions of Alaska's campaign finance laws at issue in this case. But, for the reasons stated above, the Court finds that Defendants have presented adequate evidence that the $500 base limits set forth in Alaska Stat. 15.13.070(b) further the sufficiently important state interest of preventing quid pro quo corruption or its appearance and that those limitations are closely drawn to that end; that the $3,000 nonresident aggregate limit set forth in Alaska Stat. 15.13.072 furthers the sufficiently important state interest of preventing quid pro quo corruption or its appearance; and that the political party aggregate limit does not trigger First Amendment concerns, at least under Plaintiffs' theory of the case. Accordingly, the challenged provisions of Alaska's campaign finance laws are upheld as constitutional.
IT IS SO ORDERED.
Dated at Anchorage, Alaska, this 7th day of November, 2016.